S&P 500 ends down as Treasury yields rise and traders fret about inflation

On September 10, US stocks closed lower as producer price data for August and rising oil prices raised concerns about the Federal Reserve's potential interest rate hike the following week. Additionally, climbing Treasury yields made stocks less appealing. Leading chipmakers, Nvidia and Micron Technology, experienced declines, dragging down the S&P 500.

Apple shares, however, rose by 3.6 percent following its US$1,999 iPhone launch. Disruptions in supply routes through the Strait of Hormuz and the Red Sea due to the US-Israeli conflict in Iran contributed to a 6 percent jump in Brent crude prices to $107 a barrel. This surge added fuel to inflation concerns and heightened expectations for the Fed to raise interest rates at its September 16 policy meeting.

Yield on 10-year Treasury notes surged to their highest level in nearly three years, while 30-year Treasury yields reached their highest in over 19 years and two-year Treasury yields climbed to their highest in more than two years. Ross Mayfield, an investment strategy analyst at Baird, explained that the increase in yields at the short and long ends of the curve is due to the Fed's likely rate hikes in the upcoming months, as well as debt, deficit concerns, and persistent inflation.

Higher yields negatively impact the equity market by lowering valuations and increasing the cost of operating a business and consumer expenses. On September 10, the US producer price index (PPI) rose in line with expectations, reflecting a rebound in energy product costs. Investors will closely monitor August consumer price data on September 11.

The S&P 500 dropped 0.58 percent to end the session at 7,591.75 points, while the Nasdaq declined 0.65 percent to 26,081.73 points, and the Dow Jones Industrial Average fell 0.6 percent to 52,064.10 points. The S&P 500 has lost 2 percent over the past four sessions, marking its deepest four-day loss since June. Nine out of the 11 S&P 500 sector indexes declined, led lower by materials, which dropped 1.45 percent, followed by a 0.91 percent loss in information technology.

Trading volume on US exchanges was relatively high, with 15.1 billion shares traded, compared to an average of 14.9 billion shares over the previous 20 sessions. Traders now estimate a 70 percent chance of the Federal Reserve raising interest rates by at least 25 basis points next week, up from around 64 percent before the September 10 report.

The S&P 500 has declined nearly 3 percent from its record high close on August 13 and remains up 11 percent in 2026. The recent decline, combined with strong earnings outlooks, has made the S&P 500 trading at 19 times expected earnings, its lowest level since April 2025, when former US President Donald Trump's "Liberation Day" tariff announcements sent global markets into a tailspin.

On September 10, Macy's fell 4.7 percent, while American Eagle Outfitters dropped 14 percent to its lowest since October due to its continued pessimistic annual comparable sales forecast amid uncertain discretionary spending.