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Dow slides as strong PMI lifts Treasury yields above 5%

The rise in the 10-year yield came as Fed Governor Barr said more rate increases may be needed, with markets pricing further tightening into 2027.

Reported · Written up by our desk · Major Pairs

FXStreet reports the Dow Jones Industrial Average kept sliding even after S&P Global flash PMI data showed the strongest readings since 2021, with manufacturing at 57 versus a 53.5 forecast and services at 58.7 versus 56. The index traded near 51,500, with about two-thirds of its June to August rally already lost, while the S&P 500 and Nasdaq Composite were also lower on the day.

The same PMI release showed price gauges at their highest since October 2022, and the 10-year Treasury yield climbed above 5% to its highest level since July 2007. FXStreet said the bond move reflected the market re-pricing of economic momentum and inflation pressure, rather than the outlook being driven by a single company.

FXStreet added that Fed Governor Barr argued further rate increases may be needed because inflation is not clearly on a path back to the Fed's 2% target, citing higher borrowing costs at a Chicago Fed conference focused on housing affordability. The Fed raised its policy rate to 3.75% to 4.00% on September 16, with the next decision scheduled for October 28, and rate futures imply 4.75% to 5.00% by July 2027.

Housing-related stocks were also tied to the rate outlook, with FXStreet noting that Home Depot and Sherwin Williams sell into a housing market that borrows at rates linked to the 10-year yield. The piece also highlighted company-specific pressure, including McDonald's, which was the index's biggest faller after an investor day that committed $8.5 billion to franchisee support through 2036.

Latest closeS&P 500 7,706.03 ▼0.8%|Nasdaq Comp. 26,936.04 ▼0.7%|Dow Jones 51,511.59 ▼1.0%

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