US stocks fall as Treasury yields breach 5% ahead of Fed decision
Wall Street weakened as borrowing costs, elevated oil prices and uncertainty over the Federal Reserve’s next move weighed on investor sentiment.
US stocks fell on Tuesday as investors positioned for the Federal Reserve’s interest-rate decision, with the Dow Jones Industrial Average and Nasdaq Composite each down more than 0.7% in early trading. The S&P 500 fell 0.6%, according to Yahoo Finance.
The 10-year Treasury yield briefly moved above 5% overnight, reaching its highest intraday level since 2007 before easing. The move highlighted rising government borrowing costs and renewed concerns about inflation.
Oil prices also remained elevated amid reported disruptions to Middle East energy infrastructure and attacks in the Red Sea. Brent futures rose roughly 1.9% to above US$107 a barrel, while West Texas Intermediate futures gained about 2.2% to more than US$103.50. Physical crude prices were reported at higher levels.
Market pricing indicated traders saw a roughly 91% to 93% probability of a quarter-point Federal Reserve rate rise. The probability reflected expectations tracked by CME’s FedWatch tool and was not a confirmed policy decision.
Separate data from the Bank of America Institute showed total US credit-card spending rose 4.5% year on year in August, or 3.7% excluding petrol. The figures pointed to continued consumer demand despite inflation remaining above target.
Technology sentiment was also affected by debate over the risks of frontier artificial intelligence. Anthropic chief executive Dario Amodei has called for caution and regulation, with OpenAI chief executive Sam Altman and Elon Musk expressing agreement. Nvidia chief executive Jensen Huang rejected predictions of AI-driven human extinction, while Microsoft released a preliminary AI code of conduct.
