Global equities plunged at the opening bell amid a sharp rise in Treasury yields, with the 10-year note climbing to 4.82%, as traders brace for the Federal Reserve’s upcoming interest rate announcement. The selloff reflects growing anxiety over persistently high inflation and a hawkish policy outlook.
- S&P 500 fell 1.2% at the open, Nasdaq Composite dropped 1.6%
- 10-year Treasury yield rose to 4.82%, 2-year yield to 5.21%
- JPMorgan Chase down 1.8%, Bank of America down 2.1%
- Yield curve spread widened to 61 basis points
- Markets pricing in higher probability of Fed hold or further hike
- Technology and real estate sectors led losses
Markets opened lower across major indices, with the S&P 500 shedding 1.2% and the Nasdaq Composite falling 1.6% within the first hour. The Dow Jones Industrial Average dropped 340 points, underscoring broad-based investor unease. The sell-off in equities coincided with a steep rally in U.S. Treasury yields, with the 10-year yield surging to 4.82%—its highest level since early 2023—while the 2-year yield climbed to 5.21%. These moves indicate investors are pricing in a higher probability of a rate hold or even a further hike at the upcoming Fed meeting on December 18. The bond market’s reaction intensified as Treasury futures plunged, signaling a flight to safety amid expectations of tighter monetary policy. The yield curve steepened, with the 10-year minus 2-year spread widening to 61 basis points, suggesting expectations for sustained higher short-term rates. Financial institutions, particularly those reliant on stable borrowing costs, saw shares come under pressure, with JPMorgan Chase falling 1.8% and Bank of America dropping 2.1%. Equity sectors most vulnerable to rising rates—technology, real estate, and consumer discretionary—led losses. The tech-heavy Nasdaq underperformed as growth stocks faced renewed valuation pressure. Meanwhile, defensive sectors like utilities and healthcare showed relative resilience, though even these areas saw mild declines. The market’s reaction underscores the Fed’s tightrope walk between controlling inflation and avoiding a recession. With core PCE inflation still above 3.1% and labor market data showing continued strength, expectations for a hold at 5.25%-5.50% are rising. However, the selloff suggests that markets are pricing in the possibility of another rate increase later in 2026, increasing financial stress across fixed-income and equity markets.