Wall Street Hit Hard as Investors Confront Rising Rates – Reuters

By Lewis Krauskopf, Ankika Biswas, and Shashwat Chauhan

Wall Street’s primary indexes experienced a downturn exceeding 1% on Tuesday, with 10-year Treasury yields maintaining their highest levels in years. Investors are grappling with the implications of extended high interest rates and their potential impact on the economy.

The Dow Jones Industrial Average recorded its largest single-day percentage decline since March, and all three major indexes concluded the day at their lowest closing points in over three months.

Investor unease was further heightened by the looming possibility of a partial U.S. government shutdown by the weekend, which ratings agency Moody’s cautioned could negatively affect the nation’s credit rating.

In the wake of the Federal Reserve’s cautious outlook on long-term rates last week, benchmark 10-year Treasury yields reached their highest levels in 16 years.

Brad McMillan, chief investment officer for Commonwealth Financial Network, commented, "We continue to adjust to the higher interest rates. There is increasing concern that the market is overvalued. There’s a real sense that this isn’t sustainable, leading to buyers being deterred."

The Dow fell by 388 points, or 1.14%, to close at 33,618.88. The S&P 500 decreased by 63.91 points, or 1.47%, ending at 4,273.53, while the Nasdaq dropped 207.71 points, or 1.57%, closing at 13,063.61.

All sectors of the S&P 500 ended the day in the negative, with the technology sector dropping 1.8%. The utilities and real estate sectors, sensitive to interest rate changes, fell by 3.05% and 1.8%, respectively.

The CBOE volatility index, often referred to as Wall Street’s "fear gauge," closed at its highest level since May 25.

Large technology stocks, which had been key drivers of the markets’ gains this year, weighed heavily on the indexes on Tuesday. Amazon shares fell by 4% following the U.S. Federal Trade Commission’s long-anticipated antitrust lawsuit against the company.

Investors are looking forward to the personal consumption expenditures price index due on Friday for new insights into inflation trends. This week will also provide data on durable goods, second-quarter gross domestic product, and comments from Federal Reserve officials, including Chair Jerome Powell.

In company news, shares of Immunovant surged by 97% after early-stage data from their experimental antibody treatment surpassed analysts’ expectations.

On the New York Stock Exchange, declining issues outnumbered advancing ones by a ratio of 5.9 to 1, with 37 new highs and 388 new lows.

On the Nasdaq, the ratio of declining to advancing issues was 2.1 to 1, with 35 new highs and 390 new lows being recorded.

Approximately 10.2 billion shares were traded across U.S. exchanges, consistent with the daily average over the past 20 sessions.