Stocks Close Mixed as Government Debt Selloff Resumes

Stocks closed mostly higher at the start of October after a sharp selloff in longer-dated U.S. government debt picked up again.

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA) fell approximately 74 points, or 0.2%, ending near 33,433, according to preliminary FactSet data.

S&P 500 Index

Meanwhile, the S&P 500 index ended flat at 4,288.

Nasdaq Composite Index

On the other hand, the Nasdaq Composite Index gained 0.7%.

Focus on Surging Borrowing Costs

Surging long-term borrowing costs remain a key concern in the final quarter of 2023, as there is fear that they could disrupt the U.S. economy and lead to more corporate defaults.

Debt Rout Impact

The benchmark 10-year Treasury yield rose to about 4.682% on Monday, indicating evidence of the debt rout. This can also be seen in the popular iShares 20+Year Treasury Bond ETF, which reached its lowest close since August 2007, and in the iShares Core U.S. Aggregate Bond ETF, which finished at its lowest level since October 2008, according to Dow Jones Market Data.

Stability in Short-Term U.S. Government T-bills

Despite recent volatility, investors holding short-term U.S. government T-bills have been mostly unaffected, with yields remaining steady in the 5.5% range, according to TradeWeb data.