US stocks fall as 10-year Treasury yield hits highest since 2007

On Wednesday, US stocks experienced a decline as the benchmark 10-year Treasury yields reached the highest level since 2007, following data indicating that US business activity surged to a five-year high in September. The S&P Global flash US Composite PMI Output Index increased to 58.4, marking the highest level since July 2021.

Adam Button, chief currency analyst at investingLive, noted that services sectors were leading, while manufacturing output saw a significant rise, with factory hiring increasing at the fastest pace since February 2021. The prospect of further Federal Reserve interest rate hikes due to persistent inflation above the 2% annual target contributed to the increase in yields.

Fed Governor Michael Barr stated that the Fed had taken a crucial step to recalibrate short-term borrowing costs and would likely require additional rate hikes. Stocks fell as Treasury yields rose, with the Dow Jones Industrial Average down 0.18%, the S&P 500 down 0.53%, and the Nasdaq Composite down 1.05%. Geopolitics also impacted markets, with oil prices rising ahead of a summit between US President Donald Trump and Chinese President Xi Jinping, and the dollar hitting multi-week highs against the euro, sterling, and Canadian dollar.