Why Is the Stock Market Down Today, 10/7/26?

Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) are in the red on Wednesday as rising bond yields continue to pressure equities. SPX is down 0.23%, while NDX is off 0.36%. With higher yields, the opportunity cost of owning stocks increases, which can influence some investors to sell stocks and buy bonds.

Meanwhile, Brent crude oil (BZ) is down 0.6% after rising as much as 2% this morning. Tensions in the Middle East have picked up in recent days, with nine reported attacks in the Strait of Hormuz this month. That compares to 18 total attacks in September.

Meanwhile, the U.S. and Iran remain locked in a stalemate. A senior Iranian official told Reuters that Iran's red line remains its right to enrich uranium. The official added that the two countries are not currently engaged in negotiations.

Tech and Industrials Lead Market Lower

While long-dated yields are still up, they eased following a strong 10-year note auction. The Treasury sold $39 billion of 10-year notes at a 5.3% yield, 1.7 basis points below the pre-auction market yield, signaling strong demand. That helped push yields lower, which can support stocks by making bonds less attractive relative to equities and reducing borrowing costs for companies.

Elsewhere, tech and industrial stocks are leading the decline, with Caterpillar (CAT), CrowdStrike (CRWD), and Texas Instruments (TXN) deep in the red. On the other hand, healthcare stocks are rallying, led by Eli Lilly (LLY), CVS (CVS), and Resmed (RMD). Healthcare is viewed as a defensive sector and tends to perform well when investors become more cautious and shift away from riskier, growth-oriented stocks.

Later today, the Fed will publish the minutes from its September Federal Open Market Committee (FOMC) meeting. The minutes could influence rate hike expectations at the October 28 FOMC, where the most likely outcome is for unchanged rates, according to the CME FedWatch tool. The odds of a hike have plunged in recent weeks, driven lower by a cool inflation reading and a soft jobs report. The odds are currently at 19.4%, down slightly from 19.9% a day ago.