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S&P 500 pulls away from record highs as yields climb

A 162,000 August rise in US employment coincided with a slide in the S&P 500 after traders weighed prospects for tighter Fed policy and higher Treasury yields.

Reported · Written up by our desk · Major Pairs

The S&P 500 has moved away from its record highs as investors reprice the impact of strong US labor data on Federal Reserve policy, according to Action Forex.

After US employment rose by 162,000 in August, the index fell on rumors that a stronger labor market could remove an obstacle to the Fed raising the federal funds rate. The consumer sector, healthcare, and energy were among the hardest hit, while the VIX has stayed near its lows since December, suggesting traders have not broadly panicked despite the macro shift.

Action Forex also notes that the market has increasingly treated good economic data as a negative when it raises the odds of monetary tightening. In that environment, attention is turning to rate sensitive areas such as utilities, with the Dow Jones Utility Average reaching bull market peaks faster than the S&P 500 in historical cases, followed by an average retreat of 29%.

Beyond rates, rising Treasury bond yields have added pressure to equities, with Scott Bessent pointing to the Middle East conflict as a driver. The finance minister linked the conflict to expectations of lower oil prices if the situation ends, while the article adds that Iran has fired on US ships as escalation continues.

Latest closeS&P 500 7,666.60 ▲0.5%|Dow Jones 53,061.95 ▲0.6%|VIX 15.20 ▼7.0%

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