S&P 500, SPY and VOO may fall about 5% as yields rise

The S&P 500 and ETFs that track it, including SPY and VOO, have pulled back from a year‑to‑date high of 7,618 to about 7,400 and could decline roughly 5% to near 7,000 as Treasury yields climb and odds of additional Federal Reserve rate increases rise.

U.S. Treasury yields rose sharply in recent sessions. The 10‑year yield reached about 4.55%, its highest level since late May, while the two‑year yield moved to roughly 4.2%, the strongest reading since February 2025 and well above its year‑to‑date low near 3.37%. The 30‑year yield is trading above 5%. Traders and analysts link the move in yields to last week’s stronger‑than‑expected jobs report, which showed the economy added more than 172,000 jobs and held the unemployment rate at 4.3%.

Inflation data due this week is expected to be elevated. The consensus estimate for headline consumer prices in May is about 4.3% year‑over‑year, above the Fed’s 2% target. Market participants say higher inflation readings would raise the probability of further Fed tightening and could prompt repositioning in interest‑rate sensitive assets.

Higher yields reduce the present value of future corporate earnings and raise borrowing costs for companies. That dynamic has contributed to selling in some large growth and AI‑related names this week; Broadcom and AMD posted notable declines on the most recent trading Friday.

Technical indicators show increased caution among traders. The S&P 500’s Percentage Price Oscillator has produced a bearish crossover, and the Relative Strength Index fell from an overbought reading near 77 to about 50 and is pointing downward. Market technicians view a drop toward the 7,000 area, which acted as resistance in January, as a possible break‑and‑retest of support.

Market flows could also be affected by the SpaceX initial public offering planned for June 12. Some estimates of the deal size have reached as high as $150 billion. Large listings can draw capital into new shares and prompt profit‑taking in other holdings, a pattern that traders say can increase short‑term volatility.

Traders expect ETFs that track the S&P 500 to follow the index’s moves, reflecting the same yield and sentiment pressures seen in individual stocks. Technical and yield‑driven positioning are being watched for signs of whether selling will extend to the 7,000 area or stabilize before buyers return.