NEW YORK: Wall Street’s main indices ended down over 1% on Tuesday (Sept 26) as 10-year Treasury yields held their multi-year highs, with investors still wrestling with prospects for a long period of high interest rates and the economic fallout.
The Dow Jones Industrial Average fell 388.00 points, or 1.14%, to 33,618.88, the S&P 500 lost 63.91 points, or 1.47%, to 4,273.53 and the Nasdaq Composite dropped 207.71 points, or 1.57%, to 13,063.61.
The Dow posted its biggest one-day percentage drop since March, while all three major averages ended at their lowest closing levels in well over three months.
All 11 S&P 500 sectors ended lower. The heavyweight tech sector dropped 1.8%, while the rate-sensitive utilities and real estate groups fell 3.05% and 1.8%, respectively.
The CBOE volatility index, known as Wall Street’s “fear gauge,“ closed at its highest level since May 25.
Adding to investor anxiety was the potential of a partial US government shutdown by the weekend, which ratings agency Moody’s warned would harm the country’s credit.
Benchmark 10-year Treasury yields have climbed to 16-year highs in the wake of the Federal Reserve's hawkish longer-term rate outlook last week.
“We continue to adjust to the higher interest rates,” said Brad McMillan, chief investment officer for Commonwealth Financial Network.
“What you are getting is increasingly a sense that the market is overvalued. ... There’s a real sense out there that this isn’t sustainable, and buyers are being scared away.”
Megacap stocks that have propelled indices higher this year dragged on Tuesday.
Amazon.com shares dropped 4% as the US Federal Trade Commission filed a long awaited antitrust lawsuit against the online retailer.
Investors are focused on Friday’s personal consumption expenditures price index for a fresh view of the inflation picture. This week also brings other data including on durable goods and second-quarter gross domestic product, as well as remarks by Fed policymakers such as chair Jerome Powell. – Reuters
