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Dow Declines 400 Points. As Wall Street Gets Jolted by Surging Treasury Yields on Tuesday

As investors watched the rising Treasury yields, which reached a 16-year high, stocks slumped on Tuesday.

1.5% or 446 points were lost by the Dow Jones Industrial Average. S&P 500 losses were 1.4%, and Nasdaq Composite losses were 1.3%.

After the August job vacancies survey was released and revealed a continued tight labour market, stocks dropped to their session lows as rates increased. 9.6 million vacant positions were revealed in the study for the month. Dow Jones surveyed economists who predicted 8.8 million jobs.

Since early June, the S&P 500 index dropped to its lowest point. Tuesday’s losses for the entire market index were topped by Veralto and the spice producer McCormick & Company, whose stocks both fell by at least 9%. Carnival, a cruise line, experienced a 6.3% decline, which was followed by falls of more than 5% for Airbnb and Viatris.

In its most recent session, the 10-year Treasury yield reached a peak not seen since 2007. It was trading at 4.787%. In the past month, the benchmark yield has increased as traders assess the prospect of continued Federal Reserve tightening. Increasing to 4.891%, the 30-year Treasury yield reached its highest level since October 17, 2007.

Because they worry that a tighter monetary policy could push the economy into a recession, investors have been stressing out recently about the possibility of higher rates. As a result, Treasury yields are at levels that haven’t been seen in more than ten years.

According to Alex McGrath, chief investment officer at NorthEnd Private Wealth, the increase in yields is “a huge headwind to equities.” It will be a significant headwind for all types of stocks through the end of the year, according to McGrath, unless that remains unchanged or begins to go downward.

Source (CNBC)

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