4:05 pm: US equities tank as yields rise
US stocks fell hard as Treasury yields spiked to near three-month highs while dragging down to tech stocks.
The 10-year Treasury yield rose as high as 1.558% as investors bet the Fed would carry through on its promise to curb its emergency bond-buying stimulus as inflation jumps.
Meanwhile, Facebook, Alphabet, and Amazon shares lost more than 3%.
The Nasdaq Composite dropped 2.8% for its worst day since March, falling 423 points to 14,546.
One the day, the Dow Jones Industrial Average dropped by 569 points, or 1.63%, to 34,199, while the S&P 500 declined 2.04% to 4,352.
12.05 pm: Rising oil prices spark investor inflation and rate hike concerns
US stocks fell sharply in noon trading, as the 10-year Treasury yield rose to its highest levels since June following the Federal Reserve’s signaled last week it would taper its $120 billion in monthly bond purchases “soon.”
At midday, the Dow fell 510 points to 34,360, while the S&P 500 lost 85 points at 4,359 and the tech-heavy Nasdaq dropped 384 points, or 2.6%, to 14,585.
“I’m having actually a little deja vu to last fall, if you remember last September, when we saw interest rates move a little bit and the reaction in tech,” Sanctuary Wealth chief investment officer Jeff Kilburg said.
“And the selling pressure in tech really was a catalyst last fall for the reflation and rotation trade, and again here we are,” Kilburg added.
Also weighing on stocks was the Consumer Confidence Index reading, which dropped to the lowest level since February as coronavirus (COVID-19) concerns persist.
Alphabet Inc (NASDAQ:GOOG) led the Big Tech decliners, falling nearly 4%.
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9.47am: US benchmarks start in the red
US benchmarks started in the red on Tuesday, as expected, as high bond yields spooked investors.
The Dow Jones Industrial Average fell over 96 points at 34,773, while the broader based S&P 500 lost over 35 points at 4,407.
The tech-heavy Nasdaq index dropped over 210 points to stand at 14,759.
In the US, the ten year Treasury yield rose as high as 1.546% on Tuesday, after heading north on Monday as well, as markets reckon the US central bank will make good on its promise to ease back on its stimulus measures.
6.50am: US stocks seen heading lower at open
US stocks are expected to start lower on Tuesday after US government bond yields hit their highest level in three months leading investors to switch out of interest-rate sensitive technology stocks.
Futures for the tech-laden Nasdaq-100 dropped 1.6%, while Dow Jones Industrial Average futures shed 0.5%, and those for the broader S&P 500 index fell 0.9%.
Expectations of tighter monetary policy and concerns about inflation pressures have pushed bond yields higher making them more attractive than equities. It has also boosted the US dollar, with the ICE Dollar Index reaching its highest level since November.
Stronger energy prices are also compounding concerns about inflationary pressures, with Brent crude near its highest level since October 2018.
Federal Reserve chairman Jerome Powell and US Treasury Secretary Janet Yellen are set to appear before a Senate panel at 10.00 am ET on Tuesday to discuss the state of the economic recovery.
Among stocks, major tech names moving lower ahead of the opening bell included Twitter, Qualcomm, and Snap.
But Ford Motor Company (NYSE:F) rose after the automaker said it planned to strengthen its push toward electric vehicles by spending $7 billion on new factories.