Dow Plummets Nearly 500 Points as Yields Surge; S&P and Nasdaq Also Decline

The S&P 500 experienced a decline on Tuesday as unexpected strength in the labor market raised concerns about the possibility of higher interest rates from the Federal Reserve. This uncertainty pushed Treasury yields to their highest levels in over a decade.

The index dropped by 1.5%, with a corresponding decline of 493 points, and another index fell by 2%.

### Labor Demand Surprises with Unexpected Increase

According to the U.S. Labor Department’s latest Job Openings and Labor Turnover Survey (JOLTs), job openings unexpectedly rose to approximately 9.6 million in August, contrary to projections that anticipated a decrease to around 8.8 million. This indication of a robust labor market heightened fears that the Federal Reserve might need to implement another rate hike this year, resulting in an increase in both 10-year and 30-year Treasury yields, reaching their highest points since 2007 in reaction to expectations for prolonged higher rates.

This surge in Treasury yields follows comments from Atlantic Fed President Raphael Bostic, who stated there wasn’t a pressing need for the Fed to raise rates again at this time.

### Brief Technology Sector Rebound Ends as Selling Resumes

The technology sector, which saw a temporary rebound earlier, faced renewed selling pressure led by companies like Microsoft and Meta Platforms. Meta, in particular, is reportedly considering charging a $14 monthly fee for users seeking an ad-free experience on Facebook and Instagram. This comes in the wake of a July ruling by a European court, which highlighted that Meta must obtain user consent under EU data protection rules before displaying personalized ads, raising concerns about its advertising revenue—a crucial source of income for the company.

The ongoing rise in Treasury yields is creating headwinds for growth-oriented sectors, making them less appealing to investors.

### McCormick Boosts Guidance but Revenue Misses Expectations

McCormick & Company saw its stock drop over 8% despite raising its full-year earnings guidance. The spice manufacturer’s third-quarter revenue fell short of analysts’ estimates. The company expects special charges related to organizational restructuring to lower earnings per share by $0.16 in 2023. However, excluding these special charges, the adjusted earnings per share forecast has been increased to a range of $2.62 to $2.67, up from the previous guidance of $2.60 to $2.65.

### Energy Stocks Experience Decline Amid Oil Price Rebound

Energy stocks slipped by less than 1% as oil prices increased following a previous decline, which helped to mitigate losses ahead of an upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, scheduled for Wednesday. Major players like Valero Energy, Phillips 66, and Marathon Petroleum were among the notable decliners.

Analysts at RBC indicated that no significant changes in production policy are expected from the OPEC JMMC meeting despite a nearly 9% increase in prices since the last monitoring meeting in August.