Interest rate worries again sink stocks

Bond yields climb after release of minutes from Fed’s meeting

NEW YORK — Wall Street weakened Wednesday to worsen what already has been a messy August.

The S&P 500 fell 33.53, or 0.8 percent, to 4,404.33, following up on its prior day’s tumble of 1.2 percent. The Dow Jones Industrial Average lost 180.65 points, or 0.5 percent, to 34,765.74, and the Nasdaq composite dropped 156.42, or 1.1 percent, to 13,474.63.

Increased pressure came from the bond market, where yields have recently neared their highest levels since the Great Recession sent interest rates collapsing. Yields climbed more after the release of the minutes from the Federal Reserve’s latest meeting.

The minutes suggested Fed officials are unsure about their next move after catapulting the main interest rate they control to its highest level in more than two decades. Hopes had been rising among investors that last month’s rate hike by the Fed would prove to be its last.

Some analysts took the minutes as a suggestion that another rate hike is possible, while others said it shows the Fed is likely done hiking.

“Ultimately there were no major surprises in the minutes, as the Fed is expected to remain data dependent when determining the path of monetary policy through the end of the year,” said Sam Millette, fixed income strategist for Commonwealth Financial Network.

Big technology stocks and other investments seen as vulnerable to higher rates were some of the day’s heaviest weights on indexes. Tesla fell 3.2 percent. Facebook’s parent, Meta Platforms, dropped 2.5 percent, and Amazon fell 1.9 percent.

Wall Street has been retrenching this month on several concerns, including worries that torrid gains made this year through July were overdone and that interest rates may stay high for longer.

A surprisingly strong report on sales at U.S. retailers helped cause Tuesday’s slide in stocks, as it suggested upward pressure on inflation still exists.

Treasury yields have been climbing as reports paint a picture of a still solid economy. That pressures stocks because when safe bonds are paying more in interest, investors feel less pressure to pay high prices for stocks and other risky investments.

The yield on the 10-year Treasury rose to 4.26 percent from 4.22 percent late Tuesday. It’s once again close to where it was when the 2007-09 Great Recession sent interest rates crashing.