Treasury Yields Hit 24-Year Highs, Pulling Stocks Off Records as Caterpillar Drops Nearly 6%

Long-dated U.S. Treasury yields touched fresh 24-year highs on Wednesday, October 7, as a global bond sell-off picked up steam, pulling stocks back from record territory. The 10-year yield rose to 5.36%, its highest level since April 2002, and the 30-year closed at 5.66% after touching 5.73% intraday, its highest since May 2002, according to Yahoo Finance's market close coverage. The Dow fell 341.41 points, or 0.66%, to 51,179.87, while the S&P 500 and Nasdaq Composite each lost 0.22%, closing at 7,801.77 and 27,538.69, a day after both had set record highs.

Industrials took the heaviest hit. CAT closed down about 5.7% at $813.83, after trading 6% lower at $811.70 in the morning, while DE slid 4% to $657.95, PCAR fell 2% to $106.66 and the Industrial Select Sector SPDR dropped 2% to $167.34 intraday. 24/7 Wall St tied the move to equipment makers whose customers finance purchases on credit. The rate story was not the only explanation offered: the Motley Fool's midday report also cited an analyst downgrade and AI-related jitters for Caterpillar's drop, though SentiSense's analyst feed shows no Caterpillar rating action in the past three days.

Energy and policy added to the pressure. Brent crude climbed back above $101 a barrel as Houthi attacks on Saudi airports revived Middle East supply concerns, and minutes from the Federal Reserve's September meeting, released in the afternoon, showed most participants judged another rate increase likely to be appropriate by year end. Traders priced only 17% odds of a hike at the October meeting, per Yahoo Finance.

What to watch: whether the 10-year yield keeps climbing from 5.36% as more inflation data arrives, how rate-sensitive industrials such as Caterpillar and Deere guide on dealer financing in their next earnings reports, and whether oil's move above $101 feeds further into yields.