S&P 500 Falls to Over Three-Month Low as Tech Stocks Decline Amid Rising Rates

The S&P 500 fell to its lowest point in over three months on Tuesday, driven down by disappointing consumer confidence figures that raised concerns about the economy. This comes as consumers grapple with persistently high interest rates and inflation, which may restrict their spending.

The index declined by 1.4%, marking its lowest level since June 9. Other indices also saw losses, with one dropping 1.2% and another falling by 1.5%.

Emerging Concerns for U.S. Consumers

The Conference Board’s consumer confidence index fell more than anticipated, reaching a reading of 103.0—the lowest in four months. This decline raised flags about consumers potentially feeling the strain from escalating inflation and interest rates.

Despite their spending surprising analysts positively in recent months—accounting for two-thirds of economic growth—consumers are now increasingly worried about rising prices, especially for essentials like groceries and fuel, as well as the looming threat of a government shutdown.

Dana Peterson, Chief Economist at The Conference Board, noted that consumer responses highlighted ongoing concerns about rising costs in general, particularly in essential areas.

Treasury Yields at Multi-Year Highs Amid Interest Rate Concerns

Treasury yields are currently at their highest levels in over a decade, with rates nearing 4.54%. Jamie Dimon, CEO of JPMorgan, indicated that the Federal Reserve could potentially raise rates to 7%, a level that he suggests could pose significant challenges.

Dimon expressed uncertainty about whether businesses would be prepared for such a drastic rise, emphasizing that the impact of such an adjustment would be "more painful" than the previous increases from 3% to 5%.

Tech Sector Retreats as Rate Hikes Impact Growth Stocks

The technology sector continued its downward trend as investors reacted to the likelihood of sustained high interest rates. Stocks like Alphabet, Microsoft, and Apple saw declines over 2%, reflecting the adverse effect higher rates have on the perceived future value of profits, especially within growth-focused sectors.

Amazon Shares Fall Following Antitrust Lawsuit

Amazon’s stock dropped more than 3% after the Federal Trade Commission (FTC) announced an antitrust lawsuit against the company. The FTC, supported by 17 state attorneys general, accused Amazon of employing anti-competitive practices that maintained its monopoly, restricted competitors, and hindered price reductions.

In response, Amazon’s General Counsel David Zapolsky rejected the allegations, asserting that the FTC’s lawsuit is misguided and that the company looks forward to defending itself in court.

Lawmakers Work to Prevent Government Shutdown

In Washington, lawmakers are intensifying efforts to avoid a government shutdown ahead of the October 1 deadline that would halt non-essential federal operations. The Senate is expected to vote on a 45-day funding extension bill, which would then move to the House for consideration. However, the outcome remains uncertain due to opposition from some conservative members regarding short-term funding extensions.