THE WEEK ON WALL STREET
Rising bond yields and government shutdown fears left stocks in mostly negative territory for the week.
The Dow Jones Industrial Average lost 1.34%, while the Standard & Poor’s 500 slipped 0.74%. The Nasdaq Composite index was flat (+0.06%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.95%.1,2,3
STOCKS FOLLOW THE BOND MARKET
The bond market drove stock prices for much of last week as investors fretted about rising bond yields. After beginning the week with small gains, stocks resumed their September decline amid weak housing data and a decline in consumer confidence. However, it was the jump in bond yields, which sent the 10-year Treasury yield to near a 15-year high, that may have most undermined investor sentiment.4
After a failed attempt at a rebound mid-week, stocks staged a Thursday rally on a pause in bond yield increases–a rally that extended into Friday morning on an encouraging core personal consumption expenditures (PCE) price index report. (PCE is the Fed’s preferred inflation gauge.) But the rally faded as traders fixated on a potential government shutdown.
1. The Wall Street Journal, September 29, 2023
2. The Wall Street Journal, September 29, 2023
3. The Wall Street Journal, September 29, 2023
4. CNBC, September 26, 2023