Bonds Had Their Roughest Month in Years and Stocks Slipped in September: What It Means for Your 401(k)

If your retirement statement looks a little lighter this month, here is why, and why it helps to keep the bigger picture in mind.

September 2026 ended on Wednesday, September 30, and it was a bumpy month for investors.

The S&P 500, an index that tracks about 500 large U.S. companies and is often used as a stand-in for "the stock market," closed the day down 0.3% at 7,651.54. That left it with a small loss for the month. The Dow Jones Industrial Average fell 0.9% on the day, while the tech-heavy Nasdaq Composite rose 0.2%.

The bigger story was in the bond market.

Why bonds had a rough month

The 10-year Treasury yield had its biggest one-month increase since 2022, according to Reuters, climbing 0.53 percentage points in September. It closed the month at about 5.29%, according to the Associated Press.

A bond's yield is the return investors earn for lending money to the government or a company. Bond prices and yields move in opposite directions, like two ends of a seesaw. When yields jump, the prices of bonds people already own fall. So a big rise in yields means a tough month for bond funds.

Several things pushed yields higher. Oil prices rose sharply during the month as talks between the U.S. and Iran stalled, which added to worries about inflation. The Federal Reserve raised interest rates in September for the first time since 2023, and investors have been weighing whether more hikes are coming.

There was a bit of good news on September 30: a key inflation report for August came in softer than expected, and traders lowered their bets on another rate hike in October.

Stocks are still up for the year

Even after a weak September, stocks have had a good year so far. Through September 30, the AP reported these year-to-date gains:

• S&P 500: up 11.8%
• Nasdaq: up 15.6%
• Dow: up 5.9%

That is a helpful reminder: one bad month does not erase a year of growth.

What this means for your wallet

Most people feel market moves through a 401(k), an IRA or another retirement account. If you own a "target-date" fund, which mixes stocks and bonds based on the year you plan to retire, you likely felt both the small stock dip and the bigger bond drop.

Here are some things to keep in mind:

• Short-term drops are normal. Markets go up and down. If your retirement is years away, a single month usually matters much less than staying invested over time.
• Higher yields have an upside. When yields rise, new bonds, savings accounts and certificates of deposit (CDs) may pay more interest. That can be good news for savers and for bond investors over the long run.
• Check your mix, not the headlines. Consider whether your balance of stocks and bonds still fits your goals and how soon you need the money. Many people review this once or twice a year.
• Keep contributing if you can. Regular contributions mean you buy more shares when prices are lower.
• Borrowing costs may stay high. Higher Treasury yields tend to push up mortgage rates and other loan costs. If you plan to buy a home or car, build that into your budget.