Stocks opened lower Wednesday as the long-term Treasury yields hit their highest levels in 24 years. A successful auction of 10-year notes helped yields ease back from their intraday highs, but it wasn’t enough to send the main equity benchmarks into positive territory.
The 10-year Treasury yield fell slightly after this afternoon’s bond action, but still closed up 1.5 basis points at 5.286%. The yield on the 30-year Treasury also pulled back from its early morning peak, but gained 3.0 basis points to 5.671%.
As for stocks, the blue-chip Dow Jones Industrial Average fell 0.7% to 51,179, the broader S&P 500 shed 0.2% to 7,801, and the tech-heavy Nasdaq Composite gave back 0.2% to 27,538.
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Rising Treasury yields were in focus at the Federal Reserve’s September meeting. “Changes in inflation compensation accounted for most of the net increase in shorter-maturity Treasury yields, while changes in real rates contributed to most of the net increase in longer-maturity Treasury yields,” stated the minutes from the most recent Fed meeting, where the central bank raised interest rates for the first time since 2023.
Still, most committee members believe that financial conditions remain “supportive of economic growth.”
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The minutes also revealed that “most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.”
The odds for an October rate hike have dropped over the past month thanks to encouraging inflation data and a weak September jobs report. According to CME Group FedWatch, futures traders are pricing in an 83% chance the Fed will keep the fed funds rate unchanged when it meets later this month — up from 54% a month ago. However, the probability of a December rate hike has jumped to 69% from 36%.
Webull sinks 19% on China risk
In single-stock news, Webull (BULL) sank 19.1% after a congressional committee flagged the online trading platform as a national security risk.
A report compiled by the House Select Committee on China said Webull is “tied in structural ways to the People’s Republic of China,” and that there is “a profound gap” in how the company markets itself as “an American company” and how it is controlled.
A Webull spokesperson said the report contains “significant inaccuracies and unsupported conclusions,” and that it is prepared to “address any questions directly and with the same transparency we bring to the SEC, FINRA, and regulators worldwide.”
Siebert Financial analyst Brian Vieten paused his Buy rating and price target on the fintech. “The potential regulatory and operational implications of these findings create a level of uncertainty that we cannot reasonably incorporate into our estimates or valuation at this time,” Vieten says, adding that he’s reviewing the committee’s findings and waiting for more information from Webull.
Caterpillar, Deere drop on FTC inquiry
Caterpillar (CAT) and Deere (DE) also closed lower Wednesday after the Federal Trade Commission (FTC) and Department of Agriculture launched a public inquiry into issues impacting agricultural equipment manufacturing and distribution practices.
“The joint request for information is a part of the FTC’s ongoing work to preserve competition in the agricultural sector,” according to a press release. The regulator is attempting to address complaints and anticompetitive concerns about barriers farmers face when buying and maintaining farm equipment.
CAT slumped 5.8%, making it the worst Dow Jones stock Wednesday. DE shares fell 3.8%.
