NEW YORK — (`) — A sluggish day for stocks Monday is making September the worst month of the year for Wall Street.
The S&P 500 was down 0.1% in early trading, having had its worst week in six months. The Dow Jones Industrial Average fell 73 points, or 0.2%, to 33,890 as of 9:53 a.m. Eastern time, and the Nasdaq Composite was virtually unchanged.
Stocks have struggled lately as the realization that the Federal Reserve will likely keep interest rates high well into next year has taken hold. The Fed wants to ensure high inflation falls back to its target and said last week it would likely cut interest rates by less in 2024 than traders had expected. The key interest rate is already at its highest level since 2001.
A growing realization that interest rates will remain high for longer has pushed bond market yields to their highest levels in more than a decade. This, in turn, makes investors less willing to pay high prices for all types of investments, especially those that are considered the most expensive or whose owners have to wait the longest for major future growth.
The 10-year Treasury yield rose to 4.50% from 4.44% late Friday, near its highest level since 2007. That’s up sharply from about 3.50% in May and from 0.50% about three years.
“Stocks digest gradual, growth-driven rate hikes far better than quick hikes caused by other factors such as inflation or Fed policy,” Goldman Sachs strategists led by David Kostin wrote in a report.
Higher yields are at the top of a long list of concerns weighing on Wall Street. Economies around the world are on the rocks, oil prices have risen $20 a barrel since June, and the resumption of U.S. student loan repayments could weaken the economy’s greatest strength yet: household spending.
In the short term, the U.S. government could be shut down again due to more political clashes on Capitol Hill. But Wall Street has weathered previous shutdowns, and “history shows that past shutdowns have not had a major impact on the market,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.
On Wall Street, stocks of media and entertainment companies were mixed after unionized screenwriters reached a tentative agreement on Sunday to end their historic strike. There is still no deal for striking actors.
Netflix rose 0.7%, while The Walt Disney Co. rose 0.5%. Warner Brothers Discover fell 0.7%.
Amazon rose 1.3% after announcing an investment of up to $4 billion in Anthropic as it takes a minority stake in the artificial intelligence startup. It is the latest Big Tech company to invest money in AI to capitalize on the opportunities that the latest generation of the technology will bring.
On stock markets abroad, indices fell sharply across Europe and large parts of Asia. The French CAC 40 fell 1.1% and the German DAX lost 1.3%.
In China, troubled real estate developer China Evergrande fell nearly 22% after announcing it was unable to take on more debt due to an investigation into one of its subsidiaries. That could jeopardize plans to restructure its more than $300 billion in debt.
China’s faltering economic recovery has already deprived the world of a major growth engine.
The Hang Seng in Hong Kong fell 1.8%, while stocks in Shanghai fell 0.5%.
` business reporters Matt Ott and Elaine Kurtenbach contributed.