A sluggish start to the week is keeping September on track to be the worst month of the year for Wall Street.
Stocks have struggled recently as the realisation sinks in that the Federal Reserve will likely keep interest rates high well into next year. The Fed wants to ensure high inflation gets back down to its target, and it said last week it will likely cut interest rates in 2024 by less than traders expected. Its main interest rate is already at its highest level since 2001.
The yield on the 10-year Treasury rose to 4.53 per cent from 4.44 per cent late Friday and is near its highest level since 2007. That’s up sharply from about 3.50 per cent in May and from 0.50 per cent about three years ago.“Stocks digest gradual, growth-driven increases in interest rates far better than rapid increases driven by other factors such as inflation or Fed policy,” Goldman Sachs strategists led by David Kostin wrote in a report.
In the near term, the US government may be set for another shutdown amid more political squabbles on Capitol Hill. But Wall Street has managed its way through previous shutdowns, and “history shows that past ones haven’t had much of an impact on the market,” according to Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.On Wall Street, stocks of energy companies rose to some of the market’s biggest gains.
Stocks of media and entertainment companies were mixed after unionised screenwriters reached a tentative deal on Sunday to end their historic strike. No deal yet exists for striking actors.
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