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- US stocks plunged Tuesday as Treasury yields surged to two-year highs.
- The 10-year Treasury yield rose to 1.87% — its highest level since January 2020 — up from Friday’s 1.771%.
- The Nasdaq was down nearly 3% while the Dow Jones Industrial Average fell almost 600 points.
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US stocks plunged on Tuesday as Treasury yields jumped on investor fears of the Federal Reserve’s schedule for tightening monetary policy.
The tech-heavy Nasdaq 100 was down nearly 3%, dragged by mega-cap giants from Meta (formerly Facebook) to Tesla. The Dow Jones Industrial Average slipped to its lowest this year while the S&P 500 also tumbled, with 10 out of 11 industry groups closing in the red.
The 10-year Treasury yield rose to 1.87% — its highest level since January 2020 — up from Friday’s 1.771%. Bond yields move inversely to prices.
Here’s where US indexes stood after the 4:00 p.m. ET close on Tuesday:
- S&P 500: 4,577.35, down 1.83%
- Dow Jones Industrial Average: 35,369.39, down 1.51% (542.42 points)
- Nasdaq Composite: 14,506.90, down 2.6%
Stock markets have been roiled in early 2022 by expectations that the Fed will repeatedly hike rates and start reducing its balance sheet, bringing an end to the central bank’s massive support of the US economy through the pandemic. Tech stocks, in particular, which have largely benefitted from a low-interest-rate environment, have started to feel the pressure.
“The Fed has engineered a massive hawkish pivot, contributing to an increase in volatility recently,” Jeff Buchbinder, equity strategist at LPL Financial, said in a Tuesday note. But he explained this turbulence is normal.
“Stocks have historically performed well leading up to and after the first rate hike of a cycle, with significant upside before eventual bull market tops,” Buchbinder said. “Bottom line, even with rate hikes coming soon, we think this economic cycle and bull market have quite a bit left in the tank.”
Still, the S&P 500 could see a further 10% decline if it breaks below 4,546, a key support level that it is fast approaching, Katie Stockton of Fairlead Strategies said. The benchmark needs to hold this crucial support to prevent further downside.
Microsoft agreed to acquire Activision Blizzard for $69 billion in an all-cash transaction. Shares of Activision soared as much as 38% while shares of Microsoft fell about 2%.
Joining the rally were other video-game stocks. Electronic Arts and Ubisoft surged by roughly 7% each. Roblox rallied more than 2% while “Grand Theft Auto” maker Take-Two — which reached a deal last week to buy Zynga — tacked on 5%.
Goldman Sachs, meanwhile, fell as much as nearly 9% after missing estimates for its fourth-quarter earnings report. Banks kicked off the earnings season last Friday.
In cryptocurrencies, bitcoin extended its losses to continue trading below $42,000 as the risk-off sentiment hurting tech stocks weighs on crypto. Ethereum, the second-largest digital asset, was also trading lower to $3,111.
Oil prices surpassed their highest levels since 2014 in the wake of a deadly oil tanker attack in the Middle East that stoked supply concerns.
West Texas Intermediate crude oil rose as much as 2.49% to $85.91 per barrel. Brent crude, oil’s international benchmark, jumped as much as 1.73% to $87.98 per barrel.
Gold slipped 0.28% to $1,814.27 per ounce.
