The S&P 500 Index closed down 0.48% on September 6, 2023, while the Dow Jones Industrial Average fell 0.77%, reaching a five-week low. The Nasdaq 100 Index decreased by 0.29%. E-mini S&P futures dropped by 0.46%, and September E-mini Nasdaq futures declined by 0.30%. The market’s downturn reflects ongoing inflation concerns exacerbated by a 3.25-month high in WTI crude oil prices, which surged over 3% due to escalating tensions in the Middle East.
The 10-year Treasury note yield rose to 4.85%, marking its highest level in 2.75 years, pressured by higher oil prices and increasing inflation expectations. Additionally, U.S. mortgage applications decreased by 2.7% in the week ending September 4, and the average 30-year fixed mortgage rate reached 6.85%, the highest in 14 months. The markets are pricing in a 61% probability of a 25 basis point rate hike at the upcoming Federal Open Market Committee meeting on September 15-16.
Internationally, the Euro Stoxx 50 index fell to a five-week low, declining by 1.58%, while China’s Shanghai Composite rose by 0.28%. The UK and German bond yields also climbed, reaching new highs amidst the prevailing inflation narrative.
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