Dow is ready for a third consecutive decline as the stock market resumes its yield-driven downturn

US stocks fell on Monday morning, leaving the leading benchmark index down for the third time in a row, as fears of a rapid rate hike overshadowed solid earnings expectations for companies in the coming days.

In addition, investors were monitoring potential tensions between Italy and the European Union due to budget concerns.

The bond market was closed on the occasion of Columbus Day and Indigenous Peoples Day.

How are the main landmarks?

The Dow Jones Industrial Average

DJIA, -0.07%

106 points, or 0.4%, to 26,346, while the S & P 500 index

SPX, + 0.03%

decreased by 9 points, or 0.3%, to reach 2,877. The Nasdaq Composite Index

COMP -0.09%

fell 45 points, or 0.6%, to 7,742.

The three benchmarks are on track to record a third consecutive decline.

The Dow fell 180.43 points, or 0.7%, to 26,447.05 on Friday. The S & P 500 lost 16.04 points, or 0.6%, to 2,885.57. The Nasdaq fell 91.06 points, or 1.2%, to 7,788.45.

Monday's action comes after the Nasdaq recorded its biggest weekly decline since March 23 and the S & P 500 recorded its second consecutive decline, as long-term treasury rates reached their highest level since 2011. Bond prices fall as yields rise.

Lily: 3 reasons why US government bond yields soar

What motivates the market?

An increase in government bond yields over the past few sessions may have heralded a new phase of post-crisis markets that have experienced a long period of extremely low returns.

Last week saw the performance of the 10-year US Treasury bill

TMUBMUSD10Y, + 1.37%

up 17.1 basis points, its strongest weekly increase since February, bringing it to 3.23%, its highest level in seven years.

Higher yields mean higher borrowing costs for companies and investors and have resulted in a re-evaluation of stock valuations, which are already considered high by some measures.

In addition, richer rates of so-called risk-free bonds can compete with equities, which are perceived as relatively riskier.

Rates of escalation, however, have been in a strong context for the national economy, with the unemployment rate falling to its lowest level since 1969, and a number of gauges from previous weeks have highlighted the idea that US expansion was continuing at a steady pace.

Lily: Of course, yields rise, but it is the speed of the bond market that threatens to slow down equities

In terms of quarterly results, the S & P 500 companies are expected to post a 10% profit growth in 2019, according to FactSet, thus offering more evidence of economic health.

Abroad, investors have also closely followed developments in Europe. The EU said in a letter to Italian Minister of Economy Giovanni Tria on Friday that Italy's fiscal targets were a source of concern for the trading block, creating a potential conflict.

In addition, Wall Street remains focused on advancing trade negotiations between the United States and its major partners, including China, which was previously the main source of volatility for global markets. A tariff battle between Beijing and Washington remains intact.

What do the analysts say?

"The market got off to a good start in the last quarter of the year, and then stumbled on rising bond yields. We believe that the yield effect and the upcoming season of earnings will likely reduce investors' appetite for equities, as the city's market exchange rate is subject to higher rates, "Peter wrote. Cardillo, chief economist of financial services firm Spartan Capital Securities report.

"Even if we think that the season of results will be generally favorable, the weight of the tariffs will be felt in certain situations, which could create a less enthusiastic market atmosphere. We remain cautiously optimistic in the short term, "he said.

What stocks are under discussion?

Actions of Tesla Inc.

TSLA, + 2.08%

slipped 0.6% as the electric car maker said Sunday night that it has achieved its goal of making the Model 3 sedan the safest car ever built.

ENSCO PLCStock of

ESV, + 3.66%

was up 0.5% after Rowan Cos. PLC

DRC + 2.29%

announced a merger valued at $ 12 billion. Rowan's shares rose 1.2%.

What are the other target markets?

The main Chinese indices in Shanghai

SHCOMP, -3.72%

and Shenzhen

399,106, -3.83%

more than 3.5%, traders returning to work after a week's holiday and China's central bank easing its reserves.

Meanwhile, crude oil

CLK9, -0.99%

prices were trading firmly, while gold

GCM9, -1.32%

was under pressure and the US dollar index

DXY, + 0.33%

up 0.4%, which is an unfavorable factor for currency-denominated assets.

Provide essential information for the US trading day. Subscribe to the free MarketWatch Need to Know newsletter. Register here.