US stocks fell for a third straight session on Wednesday. Rising Treasury yields and another jump in oil prices weighed on sentiment.
The Dow Jones Industrial Average dropped 405.41 points, or 0.77%, to 52,380.66. The S&P 500 slipped 0.48% to 7,636.36. The Nasdaq Composite fell 0.64% to 26,253.34.
Treasury Buyback Sends Yields Higher
The Treasury Department said it will triple its buyback of longer-dated debt to $6 billion. The move failed to stop the 10-year yield from climbing to 4.84%, its highest level since November 2023.
The 10-year Treasury Yield is inching towards 5%. Image Source: CNBC
Some traders had bet on an even bigger repurchase. Peter Boockvar of The Boock Report said Wall Street expectations ran as high as $7 billion to $8 billion.
Thomas Martin of Globalt Investments pointed to an unusual standoff in sentiment.
“You look at equity sentiment, and it‘s at an extreme. At the same time, the sentiment for higher interest rates is also at an extreme. Those two things shouldn’t be able to live together for very long.”
Martin, CNBC
Oil Extends Its Climb on Iran Tensions
Brent crude settled up 3.36% at $101.21 a barrel, its highest close since May. West Texas Intermediate (WTI) gained 3.25% to $96.05.
Escalating tensions between the US and Iran have stoked fears of disruption to Middle East energy supplies. The pressure builds on a strained bond market already rattled by the standoff.
Similar fears already sent Asian equity benchmarks lower earlier this month. Separate strikes had pushed oil to a multi-week high at the time.
Martin said a move toward $120 a barrel would grab the market‘s full attention. Wednesday’s run has not yet reached that level.
The losses followed the Dow‘s worst single day in nearly three weeks on Tuesday. That session opened a holiday-shortened week after Monday’s Labor Day closure.
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