Indexes fall at least 1% as data adds to rate worries

Major U.S. stock indexes fell by at least 1% on Tuesday afternoon, with the Dow entering negative territory for the year. This decline was driven by economic data that suggested the Federal Reserve may need to maintain high interest rates. The CBOE volatility index, also known as Wall Street’s “fear gauge,” reached its highest level since late May. Additionally, data revealed an unexpected increase in U.S. job openings in August, raising concerns about a tight labor market ahead of the upcoming monthly jobs report. Investors were closely monitoring benchmark Treasury yields, which reached their highest point in 16 years. This shift in the market has led investors to revise their expectations, as they now anticipate higher rates for a longer period of time. The rise in borrowing costs is seen as a negative factor for both businesses and consumers. The majority of S&P 500 sectors, with the exception of utilities, experienced declines, particularly in consumer discretionary and technology. Growth companies are particularly vulnerable to rising yields. The Dow Jones Industrial Average fell by 1.48%, the S&P 500 lost 1.62%, and the Nasdaq Composite dropped by 2.08%. Atlanta Fed President Raphael Bostic stated that there is no urgency for the central bank to raise its policy rate again, while Cleveland Fed President Loretta Mester expressed openness to further rate hikes. Amazon.com and Microsoft shares declined following reports that British media regulator Ofcom will push for an antitrust investigation into their dominance of the UK cloud computing market. Investors are preparing for the upcoming earnings reports from U.S. companies, hoping for positive news to boost the market. Despite the slight decline in the Dow for the year, the Nasdaq remains up by approximately 24% since the beginning of the year. Declining issues outnumbered advancers on both the NYSE and Nasdaq. The S&P 500 recorded one new 52-week high and 62 new lows, while the Nasdaq Composite had 13 new highs and 390 new lows.