September slump for Wall Street gets worse

Wall Street's ugly September got even worse Tuesday, as a sharp drop for stocks brought them back to where they were in June.

The S&P 500 tumbled 1.5% for its fifth loss in the last six days. The Dow Jones Industrial Average dropped 388 points, or 1.1%, and the Nasdaq composite lost 1.6%.

September has brought a loss of 5.2% so far for the S&P 500, putting it on track to be the worst month of the year by far, as the realization sets in that the Federal Reserve will indeed keep interest rates high for a long time. That growing understanding has sent yields in the bond market to their highest levels in more than a decade, which in turn has undercut prices for stocks and other investments.

Treasury yields rose again Thursday following a mixed batch of reports on the economy.

The yield on the 10year Treasury edged up to 4.55% from 4.54% late Monday and is near its highest level since 2007. It's up sharply from about 3.50% in May and from 0.50% about three years ago.

The rise in yields means bonds “now seem reasonable after a long time, but stocks still do not,” according to strategists at Barclays led by Ajay Rajadhyaksha.

One economic report on Tuesday showed confidence among consumers was weaker than economists expected. That's concerning because strong spending by U.S. households has been a bulwark keeping the economy out of a long-predicted recession.

A separate report said sales of new homes across the country slowed by more last month than economists expected, while a third report suggested manufacturing in Maryland, the Virginias and the Carolinas may be steadying itself following a more than yearlong slump.