NEW YORK, NY (AP) - Wall Street's miserable September got worse on Tuesday as a sharp fall in stocks brought them to where they were back in June.
The S&P 500 fell 1.5%, its fifth decline in six days. The Dow Jones Industrial Average fell 388 points or 1.1% and the Nasdaq Composite lost 1.6%.
The S&P 500 has lost 5.2% in September, making it the worst month for the year.
The Federal Reserve will in fact keep interest rates high
For a long time. This growing understanding of the market has led to yields on the bond market reaching their highest level in over a decade.
Treasury yields increased again on Thursday, following mixed economic reports.
The 10-year Treasury yield increased to 4.55% late Monday from 4.54% and is now near its highest level in 2007. The yield on the 10-year Treasury has risen sharply since May, when it was 3.50%. It is also up from 0.50% three years ago.
Ajayrajadhyaksha, a Barclays strategist, said that the rise in yields has made bonds "seem reasonable for a long time" but stocks are still not.
On Tuesday, a report showed that the economy is doing well.
Confidence among consumers
The economy's performance was lower than expected by economists. This is concerning, because the strong spending of U.S. consumers has kept the economy from a long-predicted economic recession.
Separately, a separate report indicated that sales of new homes in the United States slowed more than economists had expected last month, and a third reported suggested that manufacturing may be stabilizing after a slump lasting more than a year.
Although housing and manufacturing were affected by high interest rates in recent years, the overall economy has performed well enough that there is still concern about inflation. The Fed announced last week that it is likely to cut interest rates less than originally expected next year. In its quest to bring inflation down to the target, the Fed's primary interest rate has reached its highest level since 2002.
Wall Street is not only concerned about high interest rates but also a list of other concerns. The immediate concern is
The threat of another U.S. Government shutdown
Capitol Hill is in a state of stalemate, which could lead to the shutdown of federal services throughout the country.
Lori Calvasina is a strategist at RBC Capital Markets. She says that Wall Street has experienced shutdowns before and that stocks are volatile in the days leading up to them.
She found that the S&P 500 fell an average of 10% during the three months leading up to shutdowns lasting 10 days or longer. Stocks held up well, with an average drop of only 0.3% during shutdowns. They then recovered significantly afterward.
Wall Street has to contend with higher oil costs, unstable economies all over the world and the threat of interest rates rising for longer.
A strike by U.S. automobile workers
This could lead to a rise in inflation and the resumption by the U.S.
Student loan repayments
This could have a negative impact on household spending.
Wall Street saw the majority of stocks fall Tuesday as a result of such pressures. This includes 90% of the S&P 500.
Big Tech stocks are usually the most heavily weighed in the index. Apple lost 2.3%, and Microsoft 1.7%.
Amazon's stock drops 4%
After the Federal Trade Commission filed a lawsuit and 17 attorneys general from different states. The e-commerce giant is accused of abusing its dominant position in order to increase prices on other platforms and overcharge sellers.
Cintas fell the most in the S&P 500, with a loss of 5.3%. The company that provides employee uniforms, mop, fire extinguishers, and other services, reported a higher profit than analysts had expected for its most recent quarter. The company also increased its profit forecast for the entire fiscal year. However, it is still within the range of what many analysts had predicted.
The stock market fell around the globe, with Asia and Europe indexes falling.
The Nikkei fell by 1.1% in Japan, the Kospi in South Korea dropped by 1.3%, and Hong Kong’s Hang Seng dropped 1.5%.
Concerns in China continue to grow over Evergrande, a heavily-indebted developer of real estate. China's property market crisis is slowing down the country's economy and increasing concerns about financial stability.
The CAC 40 in France fell by 0.7% and the DAX in Germany lost 1%.
Crude oil prices are rising.
Worries about inflation are heightened. The price of a barrel of U.S. benchmark crude oil rose 71 cents, to $90.39. Brent crude, which is the international standard, gained 67 cents per barrel to $93.96.
Yuri Kageyama, Matt Ott and AP Business Writers contributed.