Rising Treasury yields and anticipation of a Federal Reserve rate hike continue to weigh on the S&P 500, as investors adjust to a higher-for-longer interest rate environment.
Stocks historically fall when the Fed raises interest rates, and the 10-year yield hitting 5% signals tightening expectations.
The 10-year Treasury yield climbed to 5% on Monday, marking its highest level since October 2023. Investors are bracing for a potential Federal Reserve rate hike this week, fueling a broader sell-off in equity markets as tightening expectations intensify.
Higher Treasury yields increase the discount rate used to value future corporate earnings, making stocks less attractive relative to risk-free government bonds.