The S&P 500 dropped 0.8% to 7,683.69 on Monday, September 28, 2026, as surging bond yields spooked investors. The S&P 500 drops Treasury yields story played out across the market: the Nasdaq Composite fell 0.9% to 26,820.38, and the Dow Jones Industrial Average fell 0.7%, according to Bloomberg and Reuters market data.
S&P 500 Drops Treasury Yields Hit Levels Not Seen Since 2007
The catalyst for the S&P 500 drops Treasury yields selloff was a violent move in the bond market. The 10-year Treasury yield hit 5.25% — its highest level since 2007 — rising about 7 basis points on Monday to 5.251%, Bloomberg reported via swissinfo’s markets wrap.
The selling wasn’t confined to the 10-year. The 30-year Treasury yield hit 5.5704%, its highest since 2004, while the 2-year yield reached 4.937%. When bond yields climb that fast, they raise borrowing costs across the economy and make stocks look expensive by comparison.
What’s Driving the S&P 500 Drops Treasury Yields Selloff
Several forces combined to push the S&P 500 lower on Monday:
- Oil price surge: President Trump rejected Iran’s proposal to reopen the Strait of Hormuz, sending Brent crude to around $105–106 a barrel. Higher oil prices keep inflation risk alive — oil had already hit $106 with diesel at a record high amid the Iran standoff.
- A hawkish Fed: The Federal Reserve hiked rates by 25 basis points earlier in September — its first hike since 2023 — and officials have signaled more hikes may be needed.
- October hike bets rise: Markets now price in roughly a 70% chance of another Fed hike in October, up from 64% on Friday, according to Tuesday reporting, The Business Times reported.
Why Rising Yields Hit Stocks So Hard
The S&P 500 drops Treasury yields relationship is one of the most reliable patterns in markets, and Monday showed why. Higher Treasury yields do three things at once:
- They raise borrowing costs across the economy — for mortgages, auto loans, and corporate debt — which slows growth.
- They make bonds more attractive relative to stocks. When an investor can earn 5.25% risk-free on a 10-year Treasury, the bar for owning riskier equities gets higher.
- They lower the present value of future earnings, which hits growth stocks — the tech giants that dominate the S&P 500 and Nasdaq — hardest.
That combination is why a 7-basis-point jump in the 10-year yield was enough to knock nearly 1% off the Nasdaq.
Gold Slides as Yields Spike
Higher yields also hit precious metals. Gold fell about 3.6% to roughly $4,118–4,131 an ounce on Monday, as rising real yields reduced the appeal of non-yielding assets.
Boeing Falls 6.9% on 737 MAX 10 Certification Delay
One of the day’s biggest single-stock losers was Boeing, which fell 6.9% after the Federal Aviation Administration delayed certification of the 737 MAX 10 — a separate company-specific blow on an already rough market day.
What Comes Next: Payrolls, PCE, Consumer Confidence
This week brings several data points that could decide whether the S&P 500 drops Treasury yields dynamic continues or reverses:
- The September US payrolls report
- The PCE inflation index — the Fed’s preferred inflation gauge
- Consumer confidence data
Strong data could fuel more October hike bets and push yields even higher; weak data could give the bond market a breather.
How Far Could Yields Go?
Traders are now watching this week’s data with unusual intensity. Stronger-than-expected payrolls or PCE inflation numbers would likely push October hike bets even higher and send yields further up; weaker data could give the bond market a breather. Either way, with the 10-year at a level not seen since 2007 and the 30-year at a 2004 high, the bond market has the stock market’s full attention — and the S&P 500 drops Treasury yields dynamic is unlikely to fade until yields stabilize.
Amid the gloom, one counterpoint stood out: Nvidia announced a record $150 billion share buyback on the same day, the largest in US corporate history — a show of confidence from the AI chip giant even as the broader market retreated.
Frequently Asked Questions
Why did the S&P 500 drop on September 28?
The S&P 500 fell 0.8% to 7,683.69 as the 10-year Treasury yield surged to 5.25%, its highest since 2007. Surging oil prices near $105–106 a barrel, inflation fears, and expectations of more Fed rate hikes drove the selloff.
How high did Treasury yields go?
The 10-year Treasury yield hit 5.25% (highest since 2007), the 30-year hit 5.5704% (highest since 2004), and the 2-year reached 4.937%.
What is the market expecting from the Fed in October?
Markets are now pricing in about a 70% chance of another Fed rate hike in October, up from 64% on Friday, after the Fed hiked 25bps in September — its first hike since 2023.
What data could move markets this week?
The September US payrolls report, the PCE inflation index, and consumer confidence data are the key catalysts traders are watching.
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