S&P 500 falls Thursday as investors weigh recent swings in rates

U.S. stocks seesawed Thursday, as traders weighed sharp swings in stocks and rates to start the month.

The S&P 500 fell 0.7%, while the Nasdaq Composite declined 0.6%. The Dow Jones Industrial Average lost 237 points, or 0.8%. The three stock benchmarks opened the session lower. All of the major averages are on pace to end the week about 5% higher.

Energy was the best-performing sector, gaining 1.2%. Utilities lagged, falling more than 1%.

The benchmark 10-year rate climbed 2 basis points to 3.785%. The 2-year yield, which is more sensitive to monetary policy changes, rose 3 basis points to 4.18%.

Wall Street started the week on a high note, with the S&P 500 staging its biggest two-day rally since 2020. Stocks fought to keep the winning streak going Wednesday but ultimately fell short. The Dow closed about 42 points lower, or 0.14%. The S&P 500 and the Nasdaq Composite slid 0.20% and 0.25%, respectively.

“Few are convinced that the recent move is more than a bear market rally, with skepticism over the durability,” said Mark Hackett, chief of investment research at Nationwide. “Confidence remains weak, ranging from CEOs, small businesses, consumers, and investors. Universal pessimism is bullish from a contrarian perspective, though timing of the pendulum swing is difficult to predict.”

Investors continue to monitor economic data to see if inflation is cooling off, or if the Federal Reserve’s rate hikes are pushing the U.S. closer to a recession.

Data from ADP showed that the labor market remained strong among private companies in September, when businesses added 208,000 jobs. That beat the 200,000 job estimate from Dow Jones. On Friday, the September jobs report from the Bureau of Labor Statistics will be released, giving the central bank and investors another piece of data.

Mortgage rates decline slightly

Interest rates on home loans have inched downward, according to Freddie Mac. A 30-year fixed rate mortgage is now averaging 6.66%, down from 6.70%. Just a year ago, rates on these loans averaged 2.99%.

A 15-year fixed-rate mortgage is now averaging 5.90%, compared to last week’s rate of 5.96%. Last year, rates on these loans averaged 2.23%.

Mortgage rates have been on a steady upward march since the Federal Reserve has kicked off its policy-tightening regime to combat inflation – including sharply boosting interest rates. Higher interest expenses on home loans have helped cool housing prices as of late.