- Stocks began the week down and bond yields rose as a US services index unexpectedly rose, fueling speculation that the Federal Reserve will maintain its tight policy to tame stubborn inflation.
- The selloff spread across all major S&P 500 industries, with roughly 95% of the companies in the index falling. Tesla fell nearly 6.5% after analysts reported that the electric-vehicle giant plans to reduce output at its Shanghai factory. A 3% drop in the Russell 2000 small-cap index.
- Treasuries fell across the yield curve, pushing 10-year yields to 3.6%. Expectations for where the fed terminal rate will be increased, with the market indicating a peak above 5% in the middle of 2023. The current benchmark lies between 3.75% and 4%. The dollar halted its four-day slide.
- Equities were also under pressure due to concerns that the rally that propelled the S&P 500 above a key technical indicator last week was overdone given the current set of economic risks.
- Traders are also looking forward to Friday's US producer price report, which will be one of the last pieces of data Fed officials see before their December 13-14 policy meeting. Inflation data over the last month indicate that pressures are gradually easing but remain very high.
