Wall Street’s main indexes closed down more than 1% on Tuesday due to the continued rise in 10-year Treasury yields. Investors are grappling with the potential for a prolonged period of high interest rates and the resulting economic consequences. The Dow experienced its largest one-day percentage decline since March, while all three major averages ended at their lowest levels in over three months.
Investor concerns were further heightened by the possibility of a partial government shutdown in the United States, which Moody’s warned would negatively impact the country’s credit. The recent hawkish rate outlook from the Federal Reserve has led to 10-year Treasury yields reaching their highest levels in 16 years.
Brad McMillan, the chief investment officer for Commonwealth Financial Network, stated that the market is adjusting to the higher interest rates. There is a growing sense that the market is overvalued and unsustainable, which is deterring buyers.
The Dow Jones Industrial Average fell 1.14%, the S&P 500 lost 1.47%, and the Nasdaq Composite dropped 1.57%. All 11 S&P 500 sectors ended lower, with the tech sector, utilities, and real estate groups experiencing significant declines.
The CBOE volatility index, also known as the “fear gauge,” closed at its highest level since May 25. Megacap stocks, which have been driving the market higher this year, weighed on the indexes on Tuesday. Amazon.com shares fell 4% as the U.S. Federal Trade Commission filed an anticipated antitrust lawsuit against the online retailer.
Investors are closely watching the personal consumption expenditures price index, which will provide insight into the inflation situation. Additionally, there will be other data releases, including durable goods and second-quarter gross domestic product, as well as remarks from Fed policymakers such as Chair Jerome Powell.
In company news, Immunovant shares surged 97% after positive early-stage data from the drug developer’s experimental antibody treatment exceeded expectations.
Declining issues outnumbered advancers by a significant margin on both the NYSE and Nasdaq. Trading volume on U.S. exchanges was in line with the daily average over the past 20 sessions.
This article was reported by Lewis Krauskopf in New York, Ankika Biswas and Shashwat Chauhan in Bengaluru, and edited by Maju Samuel and Richard Chang. The Thomson RushHourDaily Trust Principles apply.
