New York:US stocks ended Wednesday on a lower note as elevated Treasury yields exerted pressure on the markets. Minutes from the Federal Reserve meeting suggested another interest rate hike could be appropriate before the end of the year.
According to Anadolu Agency, the Dow Jones Industrial Average dropped 341.41 points, or 0.66%, closing at 51,179.87. The S&P 500 decreased by 17.16 points, or 0.22%, settling at 7,801.77 after setting a record on Tuesday. The Nasdaq Composite also fell by 61.20 points, or 0.22%, to 27,538.69.
The 10-year Treasury yield stood at 5.286%, slightly down after reaching a peak of 5.365% earlier in the day, its highest since April 2002. Yields eased following a $39 billion auction of 10-year Treasury notes, helping stocks recover some losses. Increased yields typically lead to higher borrowing costs, affecting equity valuations.
Data released on Wednesday showed that the average rate on 30-year fixed mortgages rose to 7.49% for the week ending October 2, marking its highest level since November 2023. The Mortgage Bankers Association reported this increase from 7.30% the previous week, attributing it to higher Treasury yields and widening mortgage spreads amid increased interest rate volatility. Mortgage applications declined by 4.2% from the prior week.
Federal Reserve minutes from the September 15-16 meeting revealed that most participants considered another rate increase likely by year-end. Officials underscored that future rate decisions would hinge on incoming data, the economic outlook, and risk balance. At the September meeting, the Fed raised its benchmark rate by 25 basis points to a range of 3.75%-4%, while noting that financial conditions still supported growth despite higher long-term Treasury yields.
In currency and commodities markets, the dollar strengthened against the euro, with the exchange rate decreasing by 0.56% to 1.12. Gold prices dropped by 1.4% to $4,107.50 per ounce, and West Texas Intermediate crude fell by 0.54% to $88.96 per barrel.
European markets mirrored the US trend, closing lower amid concerns over France's public finances and geopolitical uncertainty. The Stoxx Europe 600 index fell 1% to 630.25. Italy's FTSE MIB declined by 2.51% to 49,972.25, Germany's DAX decreased by 1.35% to 25,104.36, and France's CAC 40 lost 1.22% to 7,769.21. Britain's FTSE 100 and Spain's IBEX 35 also saw drops of 0.79% and 1.68%, closing at 10,458.5 and 19,118, respectively.