According to MarketWatch, Morgan Stanley Chief U.S. Equity Strategist Mike Wilson argued that a pullback in the S&P 500 could be just what the market needs to set up a stronger finish to the year.
Mike Wilson’s comments arrive against the backdrop of a dramatic bond market rout that has sent yields surging. The 30-year Treasury yield has reached its highest mark in 22 years, and the 10-year Treasury has not traded at current levels for nearly two decades.
As of Tuesday morning, the 10-year yield held near 5.234%, having briefly climbed above 5.26% earlier in the session — territory last reached roughly two decades ago. The 30-year yield stood at 5.549%, a level that revisits ground last seen around 2004. The moves in yields reflect growing anxiety that stubbornly high inflation may force the Federal Reserve to raise interest rates further.
The bond market pressure has weighed on equities. Monday’s session saw the Dow Jones Industrial Average lose more than 300 points, with the S&P 500 closing 0.8% lower and the Nasdaq Composite off 0.9%. Early Tuesday, stock futures were mixed, with Dow futures off 0.1% while Nasdaq-100 and S&P 500 futures posted marginal advances.
Rising yields have also lifted the dollar, which is up 1.5% against major currencies so far in September, reversing a two-month slide.
The bond market selloff has rippled into consumer borrowing costs. The 30-year fixed mortgage rate has climbed to 7.45%, a level not seen since 2024. Morgan Stanley economist Heather Berger said in a note to clients last week that higher borrowing costs are set to squeeze household spending, with the drag concentrated in goods purchases, and that the bank forecasts real consumption growth to slow by 40 basis points next year as a result.
The Dow is on track for its fourth consecutive weekly loss as bond yields keep borrowing costs elevated across the economy, though the S&P 500 and Nasdaq have fared better in recent sessions.
Two closely watched data releases — the Conference Board’s September consumer confidence index and the August Job Openings and Labor Turnover Survey — are set for release Tuesday at 10 a.m. ET, according to CNBC, and could add further pressure to bond markets.
