Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.5%), Nasdaq Composite (-0.8%), and DJIA (-0.4%) are firmly lower just before midday, with stocks facing pressure as oil prices and Treasury yields move higher while semiconductor and mega-cap technology stocks pull back after leading the market higher to begin the week.

Treasury yields jumped following stronger-than-expected preliminary September PMI data from S&P Global, adding to expectations for further policy tightening. The 10-year note yield is up 10 basis points to 5.07%. Those expectations were reinforced by hawkish commentary from Fed Governor Michael Barr (voting FOMC member). The probability of a 25-basis-point rate hike to 4.00-4.25% at the October FOMC meeting has increased to 68.4% from 55.4% a day ago.

Weakness is broad across stocks, with decliners outpacing advancers by nearly a 3-to-1 margin on both the NYSE and Nasdaq. Nine S&P 500 sectors trade lower, with the utilities (-1.7%) and consumer discretionary (-1.4%) sectors holding the widest losses as rate- and oil-sensitive stocks come under pressure. The information technology sector (-0.8%) is also firmly lower as the PHLX Semiconductor Index sheds 1.3%.

Outside the S&P 500, the Russell 2000 (-1.1%) underperforms amid the rise in rates, while the S&P Mid Cap 400 (+0.1%) stands out with a modest gain.