Bruised market eyes Treasury yields to gauge stocks’ path

Bruised market eyes Treasury yields to gauge stocks’ path

NEW YORK - Investors are focusing on Treasury yields as a key factor in determining how stocks will fare the rest of the year, after a month in which equities notched their steepest losses since the coronavirus pandemic began. The S&P 500 index posted its biggest monthly drop since March 2020 in September, while pulling back as much as 5% below its all-time high for the first time this year. Stocks wobbled as yields on U.S. Treasuries shot to a three-month high, exacerbating worries in a market already unsettled by a nasty fight over the U.S. debt ceiling, the fate of a massive infrastructure spending bill and the meltdown of heavily indebted Chinese property developer China Evergrande Group. The S&P 500 is still up 16% this year. "Investors are looking for a catalyst ... and the catalyst that they are currently focusing on is the direction of interest rates," said Sam Stovall, chief investment strategist at CFRA. Yields, which move inversely to bond prices, are rebounding from historically low levels and their recent climb is widely seen as a sign of economic strength. Their rally follows the Federal Reserve's hawkish tilt at its monetary policy meeting last week. The central