To The Moon

S&P 500, Nasdaq Sink to Lowest Close Since June as Investors Brace for Higher Rates for Longer

10-year Treasury yield surge to highest since October 2007

U.S. stocks finished sharply lower Thursday, with the S&P 500 and Nasdaq posting their lowest closes since June, as Treasury yields surged in the wake of the Federal Reserve's meeting on Wednesday.

How stocks traded

The $DJIA(.DJI)$  fell 370.46 points, or 1.1%, ending at 34,070.42, the lowest close since July 10, according to Dow Jones Market Data.The $S&P 500(.SPX)$  shed 72.20 points, or 1.6%, closing at 4,330. That was its lowest close since June 26. The $NASDAQ(.IXIC)$  dropped 245.14 points, or 1.8%, ending at 13,223.98, the lowest finish since June 7.

On Wednesday, the Dow Jones Industrial Average DJIA fell 0.2%, while the S&P 500 and Nasdaq Composite logged their lowest closing levels of September.

What drove markets

Stocks tumbled into the closing bell, as investor fears of a potential recession in the U.S. were reawakened by fresh indications that the Federal Reserve expects interest rates to stay high through next year.

The Fed's revised "dot plot" forecast released on Wednesday fortified a view that the potential path of interest rates could remain higher for longer, with the central bank's policy rate pegged to remain above 5% for some time. That could put stress on companies and landlords with trillions of dollars of debt coming due, and could also weigh on stocks.

Higher interest rates could be problematic for highflying growth stocks in the weeks and months ahead, said Eric Diton, president and managing director of the Wealth Alliance.

Shares of some of the best-performing large-cap stocks finished lower, including $NVIDIA Corp(NVDA)$ , which has become the poster child for the "Magnificent Seven" group of mega-cap tech stocks that have driven much of this year's gains.

The pressure on equities comes as the $U.S. 10-Year Treasury Notes Yield(US10Y.BD)$ climbed to 4.479%, rising 13.3 basis points to the highest level since October 18, 2007. The ICE U.S. Dollar Index DXY, a gauge of the greenback's strength against other major currencies, rose 0.2%. U.S. benchmark West Texas Intermediate crude prices (CL00) (CLX23) ended slightly below $90 a barrel on Thursday. Adding more fuel to the dollar's gains, the Bank of England decided to leave interest rates on hold Thursday, signaling a shift in its battle against inflation.

In U.S. economic data on Thursday, the number of Americans applying for jobless benefits fell to 201,000 last week, the lowest level in eight months. The Philadelphia Fed said Thursday that its gauge of regional business activity fell back into contraction territory in August. Finally, the leading economic index fell 0.4% in August and declined for the 17th month in a row.

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