Wall Street stock market weakens again as higher bond yields keep biting

The S&P 500 sank 33.97 points, or 0.8%, to 4,370.36, and August is on track to be its worst month of the year by far. The Dow Jones Industrial Average dropped 290.91 points, or 0.8%, to 34,474.83, and the Nasdaq composite fell 157.70, or 1.2%, to 13,316.93.

The losses were widespread but some of the hardest hit were high-growth stocks seen as the most vulnerable to higher interest rates. Meta Platforms sank 3.1%, and Tesla dropped 2.8%. Apple fell 1.5% and was the heaviest weight on the S&P 500.

Stocks have broadly retreated in August following a torrid first seven months of the year. That’s in part because a swift rise in bond yields is forcing a reassessment of how much to pay for stocks.

The 10-year Treasury is now yielding 4.28% after touching its highest level since October in the morning. If it reaches 4.34%, it will be at a level unseen since 2007, according to Tradeweb. The 10-year Treasury was yielding less than 0.70% three years ago.

Higher yields hurt stock prices because investors are less inclined to pay high prices for stocks and other investments that aren’t as steady as bonds.

They also mean borrowers have to pay more to get cash, which can crimp corporate profits and cause things to break in the system, like the three high-profile U.S. bank failures this spring.

More data came in Thursday showing the U.S. economy remains resilient, but that could keep upward pressure on inflation and give the Federal Reserve reason to keep interest rates higher for longer.

Fewer workers applied for unemployment benefits last week than economists expected, a signal that the job market continues to be solid.

A survey of manufacturers in the mid-Atlantic region also unexpectedly showed growth, when economists were expecting another month of contraction. Manufacturing has been an area of the economy hit hardest by higher interest rates.

Oil prices rose Thursday to recover from some of their slide earlier in the week, and energy producers saw some of the rare gains within the S&P 500. Exxon Mobil rose 1.9%, and ConocoPhillips gained 1.8%.

Cisco Systems was a bright spot in the tech sector, rising 3.3%. The maker of networking equipment reported stronger profit and revenue for the latest quarter than analysts expected.

Walmart also topped expectations and raised its forecast for full-year results, but its stock swung from an early gain to a loss of 2.2%.

Abroad, stock indexes fell across much of Europe and Asia.