Stephane de La Faverie, chairman of the Estee Lauder Companies, attends the opening bell ceremony at the New York Stock Exchange on Oct. 5 (local time). [AFP]
Stephane de La Faverie, chairman of the Estee Lauder Companies, attends the opening bell ceremony at the New York Stock Exchange on Oct. 5 (local time). [AFP]

All three major US stock indexes closed lower Wednesday as surging Treasury yields — after a brief pause — resumed their climb and weighed on investor sentiment.

The Dow Jones Industrial Average fell 341.41 points, or 0.66 percent, to close at 51,179.87. The S&P 500 dropped 17.16 points, or 0.22 percent, to 7,801.77, while the tech-heavy Nasdaq Composite edged down 61.20 points, or 0.22 percent, to 27,538.69.

Both the S&P 500 and the Nasdaq had hit record highs earlier Wednesday before pulling back. The day's declines were widely attributed to the pressure of sharply rising US Treasury yields.

The yield on the 10-year Treasury note surged past 5.36 percent during trading, its highest level in 20 years. The 30-year yield climbed to around 5.73 percent, a 24-year high. Treasury yields have been hovering at decades-long highs in recent weeks amid growing inflation concerns tied to elevated oil prices and worries over expanding US government fiscal spending.

At least some relief came when a $39 billion auction of 10-year Treasury notes drew strong demand, pulling yields back from their intraday highs. The smooth auction brought the 10-year yield down to around 5.28 percent. Still, the auction's accepted yield of 5.3 percent was the highest since 2000.

As Treasury yields pared their gains, crude oil prices also fell, helping limit the stock market's losses. The International Energy Agency said Wednesday it had decided to accelerate the release of strategic petroleum reserves and could release diesel reserves if necessary. In response, West Texas Intermediate crude for November delivery fell $1.16, or 1.3 percent. December Brent crude settled down 38 cents, or 0.38 percent, at $100.20 a barrel.

Minutes from the Federal Reserve's September Federal Open Market Committee meeting, released Wednesday, also helped temper the rise in Treasury yields after reaffirming the possibility of another rate hike before year-end. According to the minutes, most FOMC participants judged it likely appropriate to raise the benchmark interest rate one more time before the end of the year.

"There's a good chance we get another rate hike this year because monetary policy isn't that restrictive right now," said David Russell, head of global market strategy at TradeStation. "Price stability is the Fed's dominant mandate when inflation is above target and most economic activity indicators are strong."


kate01@heraldcorp.com