U.S. stocks fell sharply on Tuesday, with tech names dragging down the broader markets as Treasury yields traded near three-month highs and lawmakers in Washington continued their budget stalemate.
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The Nasdaq Composite dropped 2.83% to 14,546.68 for its worst day since March and the S&P 500 shed 2.04% to finish at 4,352.63. The Dow Jones Industrial Average lost 569.38 points, or 1.63%, to close at 34,299.99.
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The 10-year Treasury yield continued its speedy climb on Tuesday, rising as high as 1.567% as investors bet the Fed would carry through on its promise to curb its emergency bond-buying stimulus as inflation jumps. The 10-year yield, which traded as low as 1.13% as recently as August, has reversed dramatically to the highest levels since June after the Fed signaled last week it would taper its $120 billion in monthly bond purchases “soon.”
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Also weighing on sentiment was a budget showdown in Washington. Senate Republicans blocked a House-passed bill Monday that would have funded the government into December and suspended the debt ceiling until December of 2022.
Congress must approve government funding by Friday to avoid a shutdown, and Treasury Secretary Janet Yellen warned Congress in a letter on Tuesday that lawmakers need to raise the debt limit by Oct. 18 to avoid a government default. President Biden’s massive infrastructure plan also faces an uncertain future.
European markets close lower as tech stocks fall sharply; Stoxx 600 down 2%
European stocks closed sharply lower on Tuesday as global investors monitored a spike in U.S. bond yields and Chinese growth concerns.
The pan-European Stoxx 600 closed down by around 2% provisionally, with tech stocks dropping 4.4% to lead the losses.
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Reference: CNBC
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