Stock Markets Plummet Amid Higher Bond Yields and Global Economic Concerns

Stocks tumble on higher bond yields, with the S&P 500 down -1.26%, Dow Jones Industrials down -1.23%, and Nasdaq 100 down -1.38%. Higher bond yields are weighing on stocks, with the 10-year T-note yield up +5 bp to 4.28%. Global bond yields are climbing on concerns over government finances and lingering inflation risks.

Stocks tumbled across major indices on Friday, September 2, 2025, as higher bond yields weighed on investor sentiment. The S&P 500 fell by -1.26%, the Dow Jones Industrial Average dropped by -1.23%, and the Nasdaq 100 declined by -1.38%. The 10-year Treasury note yield increased by 5 basis points to 4.28%, reflecting broader concerns over government finances and lingering inflation risks [1].

Deutsche Bank CEO Christian Sewing expects bond yields to remain elevated due to political uncertainty, lack of reforms, and rising global indebtedness. He believes the recent bond selloff is not just a "flare-up" and expects yields to remain high despite not anticipating further market dislocations [2]. This sentiment was echoed by Isabel Schnabel, a member of the European Central Bank's Executive Board, who warned that any attempts to undermine central bank independence could lead to higher interest rates and inflation [3].

In the UK, 30-year yields reached their highest levels since 1998, while US debt yields are approaching the closely watched 5% level. France's political crisis, with Prime Minister Francois Bayrou calling a confidence vote over budget cuts, has added to global uncertainty [2]. In Japan, budget demands hit a record high of 831 billion yen ($831.13 billion), driven by record debt-servicing costs and defense spending. The uncertainty surrounding the political future of Prime Minister Shigeru Ishiba has further contributed to market concerns [2].

Despite the challenging market conditions, some sectors showed resilience. Google parent Alphabet (GOOG) shares jumped 9% to an all-time high after a federal judge spared it from selling its Chrome browser as a remedy to last year's landmark antitrust ruling against the search giant. The ruling allows Google to continue paying other companies for Chrome to be preloaded onto new devices, but bars it from inking exclusive deals. Shares of Apple (AAPL), which Google pays about $20 billion a year to be the default browser on iPhones, rose nearly 4% [4].

Macy's (M) stock soared 20% after the department store topped estimates with its second-quarter results and raised its full-year outlook. Campbell's Co. (CPB) rose 7% after the soup and sauce maker beat earnings estimates. Shares of Western Digital (WDC) gained 5% after Morgan Stanley called the data storage company's stock a "top pick" and raised its price target [4].

Meanwhile, Treasury yields moved lower as investors bet that Wednesday's job openings data gave the Federal Reserve more reason to cut rates. The yield on the 10-year Treasury slid to 4.22% from 4.26% at yesterday's close. The 30-year yield, which early Wednesday briefly topped 5% for the first time since July, dropped to 4.9%. Gold climbed to a record high for the third straight day, and settled 0.8% higher at $3,620/oz as tariff and economic uncertainty nudged some investors into the traditional safe haven [4].

The U.S. dollar index, which tracks the performance of the U.S. dollar against a basket of foreign currencies, ticked down 0.3% to about 98.15. Biggest S&P 500 Movers on Wednesday included Alphabet (GOOGL, GOOG) shares soaring more than 9%, Campbell's (CPB) reported better-than-expected sales and adjusted profits, and Western Digital (WDC) shares gaining 5%. Dollar Tree (DLTR) shares plunged 8.4% on the discount retailer's lackluster guidance [4].

References:
[1] https://www.bloomberg.com/news/articles/2025-09-03/deutsche-bank-s-sewing-says-bond-selloff-isn-t-just-flare-up
[2] https://www.reuters.com/markets/asia/japans-budget-demands-hit-record-831-billion-political-uncertainty-increases-2025-09-03/
[3] https://www.markets.com/vc/news/central-bank-independence-global-financial-stability-892-en-eu/
[4] https://www.investopedia.com/dow-jones-today-09032025-11802406