The Dow Jones Industrial Average fell 451 points, or 0.9%, while the S&P 500 declined 0.6%. The Nasdaq Composite slipped 0.9%.
The pullback came as global bond yields climbed and investors awaited the minutes of the Federal Reserve’s September meeting for clues on the central bank’s interest-rate outlook.
Oil prices also moved higher. U.S. crude futures rose 1% to trade above $90 a barrel, while Brent crude gained nearly 1% to around $102 a barrel.
The rise in oil prices came alongside another sharp move higher in Treasury yields. The benchmark 10-year Treasury yield climbed more than 8 basis points to 5.356%, its highest level since April 2002. The 30-year Treasury yield also rose more than 8 basis points to 5.725%, after hitting its highest level since May 2002.
The moves came ahead of a Treasury auction on Wednesday, with the government set to sell $39 billion of 10-year notes.
Investors are also awaiting the minutes from the Fed’s September meeting, which could offer further clues on the central bank’s rate outlook and the likelihood of additional policy tightening.
The S&P 500 closed above 7,800 for the first time on Tuesday, helped by gains in chipmakers, while a pullback in bond yields supported equities.
US stock futures fall as oil prices, bond yields rise ahead of Fed minutes
US stock futures fell on Wednesday, October 7, as oil prices and Treasury yields moved higher, weighing on investor sentiment a day after the S&P 500 closed at a record high.
Futures tied to the Dow Jones Industrial Average fell about 0.4%, while S&P 500 futures slipped 0.2%. Nasdaq-100 futures were down around 0.4%.
Treasury yields rise ahead of Fed minutes
The rise in bond yields came ahead of the release of minutes from the Federal Reserve’s September policy meeting, which investors will scrutinise for clues on the central bank’s interest-rate path.
The minutes could offer insight into whether the Fed’s September rate hike was a one-off move or whether policymakers see scope for further increases.
The benchmark 10-year US Treasury yield rose about 6 basis points to 5.326%, while the 30-year yield climbed nearly 7 basis points to 5.706%, its highest level since 2002.
Oil prices add to inflation concerns
Oil prices also extended gains, with US crude futures moving closer to $90 a barrel. Brent crude rose about 1% to $101.92 a barrel.
Higher oil prices could add to inflation concerns and strengthen expectations of tighter monetary policy, putting further pressure on equities.
European, Asian stocks fall
European stocks declined on Wednesday, with the pan-European Stoxx 600 down 0.8%. The FTSE 100 fell 0.7%, France’s CAC 40 declined 1% and Germany’s DAX dropped 1.3%. Italy’s FTSE MIB fell 1.9%.
In Asia, Japan’s Nikkei 225 closed 0.92% lower, while the Topix fell 0.7%. South Korea’s Kospi declined nearly 2% and the Kosdaq lost 2.34%.
Australia’s S&P/ASX 200 ended little changed, while mainland Chinese markets remained closed for the Golden Week holiday.
Also Read: H-1B Visa Crackdown: Bill seeks $250,000 fine, 10-year sponsorship ban