Utilities Drop Sharply as Treasury Yields Rise

Most stocks closed lower Monday as the constrictor of higher interest rates tightens its coils around Wall Street. The S&P 500 ended little changed, while the Dow Jones Industrial Average fell 74 points, and the Nasdaq composite rose 0.7%. Slumps for oil-and-gas stocks weighed on the market after crude prices gave back some of their sharp gains since the summer, the AP reports. More than three out of four stocks within the S&P 500 fell alongside them, but gains for Apple and other influential Big Tech stocks helped to support indexes. Treasury yields rose further into heights unseen in more than a decade.

Stocks have broadly given back about 40% of their strong gains for the year since the end of July. The main reason is Wall Street's growing acceptance that high interest rates are here to stay a while as the Federal Reserve tries to knock high inflation lower. That in turn has pushed Treasury yields to their highest levels in more than a decade. The yield on the 10-year Treasury climbed again Monday, up to 4.67% from 4.58% late Friday, and is near its highest level since 2007. Stocks that pay high dividends with relatively steady businesses see particular pain because their investors are more likely to switch between stocks and bonds. That puts a harsh spotlight on utility companies. PG&E dropped 5.6%, and Dominion Energy sank 5.3% for some of the sharpest losses in the S&P 500.

The drop for oil dragged stocks lower across the energy sector. Exxon Mobil fell 1.7%, and Chevron lost 1.2%. SmileDirectClub plunged 61.2% to 16 cents after the company that helps people straighten their teeth filed for Chapter 11 bankruptcy protection. On the winning side of Wall Street, Discover Financial Services rose 4.9% for the biggest gain in the S&P 500. The company gave details about a consent order it received from the Federal Deposit Insurance Corp, requiring Discover Bank to improve its consumer compliance management system. Analysts pointed to how Discover did not receive a fine, which could be seen as a positive for the stock.

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