Wall St kicks off Sept under pressure as higher yields, oil prices weigh

NEW YORK: The main US stock indexes slipped on Tuesday, as elevated bond yields and higher oil prices kept investors at bay at the start of a historically weak month for equities.

A sharp increase in rate-hike bets has soured sentiment in recent sessions, while renewed clashes in the Middle East have heightened worries that borrowing costs may need to rise to contain price pressures.

The selloff in US Treasuries also pushed yields to their highest in months, dampening risk appetite further. Higher yields on risk-free Treasuries typically reduce the appeal of equities.

“It’s time to trim the winners and position a little bit more defensively,” said Ryan Isherwood, founder and CEO of Significance Capital.

“The rubber band is stretched pretty tight on oil inventories, and it’s not going to take a lot to break.”

Investors are also contending with seasonal weakness. Since 1926, the benchmark S&P 500 has lost 0.7 percent on average in September, making it the weakest month for stocks and the only one with a negative average return, according to Fisher Investments, which cited data from Finaeon.

Still, historical trends may not be a reason to step away from stocks.

“Historically, it is when economic conditions were deteriorating that some of these worst outcomes for September and October have played out, which is not necessarily the case this year,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.

At 11:31 a.m. ET, the Dow Jones Industrial Average fell 215.70 points, or 0.41 percent, to 52,970.20, and the Nasdaq Composite lost 185.42 points, or 0.70 percent, to 26,185.47.

The S&P 500 was last down 33.19 points, or 0.43 percent, to 7,652.95 after hitting its lowest in nearly a month earlier in the session.

Wall Street’s fear gauge, the CBOE Volatility Index, rose 0.43 points to 15.36.

Six of the 11 main S&P 500 sectors were in negative territory. Consumer discretionary stocks led losses with a 1.60 percent fall, while information technology slid 0.78 percent.

The Philadelphia SE Semiconductor index fell to a near one-month low.

Broadcom was down 0.42 percent ahead of results on Wednesday. Nvidia, Intel and AMD were down between 0.68 percent and 2.56 percent.

US job openings rose to 7.27 million in July, less than the 7.3 million expected, according to economists polled by Reuters. The more crucial nonfarm payrolls data is due on Friday.