Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 16, 2026.
Jeenah Moon | Reuters
U.S. equities fell on Wednesday as Treasury yields marched higher amid concerns among investors that more interest rate hikes from the Federal Reserve may be coming down the pike.
The S&P 500 dropped 0.75% to end at 7,706.03, while the Nasdaq Composite shed 1.13% to close at 26,936.04. The Dow Jones Industrial Average was down 352.10 points, or 0.68%, and settled at 51,511.59.
Declines in utilities and consumer discretionary stocks led the broader market’s fall, shedding more than 1% each.
Equities were weighed down by an increase in Treasury yields, which jumped after the latest purchasing managers’ index readings came in hot. The yield on the 10-year Treasury note reached 5.135%, its highest level since July 2007. It also saw its biggest one-day move since April 7, 2025. The 2-year Treasury note yield hit its highest level since May 2024 at 4.947%.
2-year yield vs. 10-year yield, 1-day
“We have a lot of strength in corporate earnings, but we also have this inflationary pressure, and there’s a tug of war there,” Massimo Santicchia, head of U.S. equities at Procyon, said to CNBC, adding that it’s “not just oil” that’s driving inflation.
“It’s broader, and it’s particularly in the services sector,” he said. “There’s no way that the Fed is going to lower rates or pause at this point. Probably we’re going to see maybe two, three rate increases.”
Federal Reserve Governor Michael Barr said Wednesday that “further policy adjustments are likely to be needed” to get inflation under control.
“Economic growth is strong and the labor market is solid, but inflation is above our 2 percent target and not clearly trending toward target in a timely way,” he said. “Moreover, risks to achieving our inflation target have increased, while risks to the labor market have receded.”
Odds that the Fed would hike rates by a quarter percentage point in October stood above 66% following the developments, according to the CME FedWatch tool. That’s up from 55.4% a day ago and just 8.8% one month ago.
Crude oil futures moved up as well. Brent crude futures for November delivery advanced about 3.9% to $103.08 a barrel, while U.S. West Texas Intermediate crude futures settled up 1.8% at $92.16 per barrel.
During the annual United Nations General Assembly gathering in New York on Tuesday, President Donald Trump said that U.S. and Iranian officials met for three hours. He described it as a “very good meeting.”
Earlier Tuesday in his address to the U.N., Trump said he has a “big decision” over whether to reach a deal with Tehran or “annihilate” the country.
In Tuesday’s session, the Nasdaq hit a new all-time intraday high and closed at a record, while the Dow finished lower. The S&P 500 was roughly flat.
