Dow drops 450 points as 10-year Treasury yield hits 5%

Dow drops 450 points as 10-year Treasury yield hits 5%

Tue, September 15, 2026 at 5:23 PM GMT+3 2 min read

U.S. stocks fell Tuesday as the 10-year Treasury yield climbed above 5% for the first time since 2007, with investors awaiting a Federal Reserve interest-rate decision expected Wednesday.

The Dow Jones Industrial Average dropped roughly 449 points, or 0.86%. The S&P 500 fell about 0.34% and the Nasdaq Composite declined 0.48%. The 10-year Treasury yield rose as high as 5.041% before pulling back to trade around 5.011%.

Oil prices extended gains after Saudi Arabia shut a key pipeline that bypasses the Strait of Hormuz. Brent crude futures for November delivery rose about 1.6% to trade above $107 a barrel, while West Texas Intermediate futures climbed to above $103.

Fed funds futures point to roughly a 90% to 93% probability that the Fed raises its benchmark rate by a quarter percentage point on Wednesday, which would lift the upper bound of the target range to 4%, according to The Wall Street Journal. That probability was roughly 59% a week ago.

Christopher Hodge, chief economist for the U.S. at Natixis CIB Americas, said in a note that he expects Fed Chair Kevin Warsh to signal the rate move is not a commitment to further hikes. "We also think that he will emphasize that this decision was discrete and does not pre-commit the Fed to any actions in subsequent meetings, giving him and the Committee maximum flexibility to respond to shocks," Hodge said, according to CNBC.

Losses in the S&P 500 and Nasdaq were cushioned by a rebound in several stocks tied to artificial intelligence, after that group came under selling pressure the day before. Nvidia and Micron Technology posted gains of roughly 1%, and Advanced Micro Devices and Intel each advanced more than 2%.

Strategists at Barclays said in a Tuesday note that higher yields were creating growing risks for equity investors, according to CNBC. The strategists identified the 5% mark on the 10-year as a threshold that has historically preceded a more durable headwind for equity markets. "With inflation risks lingering and yields moving higher, the cushion provided by earnings growth may become increasingly difficult to maintain," the strategists said.

The simultaneous climb in yields and crude prices underscores growing anxiety that the U.S.-Iran conflict could stoke inflation and keep central banks in a tightening posture for longer.