Worries that the central bank could taper its $85 billion a month in bond purchases, or quantitative easing, as early as September has spurred a huge sell-off in bonds.
Investors have yanked nearly $20 billion from bond mutual funds and exchange traded funds so far in August. That's the fourth highest pullback ever, according to TrimTabs data. In June, investors took out $69.1 billion -- the highest on record.
The heavy selling has pushed long-term bond rates to two-year highs, with the benchmark 10-year Treasury yield nearing 3%.
"As much as bond professionals say they've never really liked QE, they're trading as though they miss it already," said Jim Vogel, interest rate strategist at FTN Financial.
The Fed will remain in focus this week as investors look ahead to Wednesday. That's when the Fed releases minutes from its last monetary policy meeting. The Kansas City Fed also hosts its annual conference in Jackson Hole, Wyo. later this week.
With no economic data or significant earnings reports Monday, the Dow and S&P finished lower and experienced their first four-day slide of the year. The Nasdaq also ended the day in the red.
What's moving: Shares of Chesapeake Energy (Fortune 500) initially rose following news that Carl Icahn boosted his stake in the natural gas company to almost 10%. But the stock headed lower by the end of the day. ,
Apple, (Fortune 500) which Icahn announced a "large" position in last week, continued to climb, hitting the highest level in seven months. And the stock was the hottest topic among traders on StockTwits. ,
Of course not everyone was so bullish.
There was also plenty of chatter about Intel (Fortune 500), which was upgraded to "neutral" by analysts at Piper Jaffray. ,
Shares of several Chinese companies were flying high and generating buzz on StockTwits as well. AutoNavi Holdings (, in which Chinese e-commerce leader Alibaba recently purchased a stake, rose 8%. Search engine )Qihoo 360 Technology (, Chinese real estate website )SouFun Holdings ( and social network )YY ( also finished sharply higher. )
The earnings calendar was light Monday, but results are due from J.C. Penney (Fortune 500), , Best Buy (Fortune 500) and , Home Depot (Fortune 500) on Tuesday. , Targe (Fortune 500)t and , Hewlett-Packar (Fortune 500)d are also set to report later in the week. ,
World markets: European markets closed slightly lower, while Asian markets ended with mixed results. Both the Shanghai Composite index and Japan's Nikkei rose nearly 1%. Stocks in Hong Kong declined by 0.3%. And investors are also nervously watching India, where stocks have plunged lately as the country's rupee currency hit an all-time low.
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|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.37%||4.31%|
|15 yr fixed||3.40%||3.32%|
|30 yr refi||4.38%||4.31%|
|15 yr refi||3.39%||3.32%|
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