Wall Street in red, pressured by better US bond yields

Wall Street This Monday is consolidating the worst month of the year for the stock market of NYplunging investors andn a state of uncertainty and caution.

He S&P 500 experienced a drop of 0.1%, reflecting its worst weekly performance in six months. For its part, the index Dow Jones it does so by 0.2%, while the composite index Nasdaq it does so by 0.1%.

In the midst of this adverse climate, stocks have faced recent challengesas the Federal Reserve expresses its intention to keep interest rates high until much of next year. The Fed seeks to control theat high inflation and announced that it is likely to reduce interest rates in 2024 less than traders expected. Its main interest rate is already at its highest level since 2001.

The increasingly clear perception that monetary policy will continue Rising for an extended period has pushed up yields in the bond market to levels not seen in more than a decade. This has made investors more reluctant to pay high prices for all types of investments, especially those that are considered expensive or that promise significant growth in the future but require time to materialize.

Wall Street: the impact of high bond interest rates

The performance of 10-year Treasury bond rose to 4.50% from 4.44% on Friday, approaching its highest level since 2007. This climb is notable from 3.50% in May and 0.50% three years ago.

“Stocks more effectively absorb gradual increases in interest rates driven by growth than rapid increases generated by other factors, such as inflation or Federal Reserve policies.”“, indicated the strategists of Goldman Sachsled by David Kostin, in a report.

The increase in yields It is just one of the many factors that worry Wall Street. Global economies appear to be faltering, oil prices have risen at 20 dollars per barrel since June and the resumption of student loan payments in the United States It could weaken what until now has been the main strength of the economy: household spending.

In the short term, the US government faces possibility of another shutdown due to political disputes at the Capitol. However, Wall Street has already overcome previous closures and, as Chris Larkin, managing director of trading and investment at Morgan Stanley E-Trade, “history shows that these events have not had a great impact on the market.” Market resilience is tested once again in these times of financial turbulence and uncertainty.