The stock market’s summer rally has come to an end as concerns over rising bond yields and a stronger dollar are causing stocks to decline. The yield on the 10-year U.S. Treasury note, which settled at a 16-year high above 4.5%, is still above that level. Rising yields are worrying investors as they could slow down the economy by increasing borrowing costs for businesses and consumers. Additionally, a stronger dollar can harm companies that rely on revenue from outside of the country. This combination of factors has caused a decline in the stock market.
Furthermore, Moody’s Investors Service has issued a warning that a government shutdown, which may happen within days, could negatively impact the U.S.’s credit rating. This further adds to the concerns facing the stock market. As a result of these factors, U.S. stocks fell, with declines across sectors. All three major indexes were down more than 1%, with the Dow losing approximately 400 points. Amazon also experienced a decline of more than 3% following a lawsuit filed by the Federal Trade Commission, alleging that the online retail giant has monopoly power.
Meanwhile, in other markets, Asian markets fell due to concerns regarding China’s property sector, while European indexes also slipped. Additionally, oil prices rose following recent declines, but investors remain nervous that the increase in energy prices will contribute to inflation and complicate the Federal Reserve’s job. Looking ahead, upcoming market events include Costco reporting earnings after the market close, an updated second-quarter GDP reading on Thursday, and consumer-spending data and the Fed’s preferred inflation gauge on Friday.