- Us stocks slipped on Tuesday as Treasury yields surged to two-year highs.
- The 10-year Treasury yield rose to 1.818% to its highest level since January 2020, up from Friday's 1.771%.
- All indexes, dragged by mega-cap tech giants from Meta to Tesla, were in the red.
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US stocks plunged on Tuesday as a jump in Treasury yields hammered at many of the largest tech names.
The Nasdaq was down nearly 2% at the open and the Dow Jones Industrial Average fell by 439 points. Mega-cap tech giants from Meta (formerly Facebook) to Tesla, were in the red to begin the shortened trading week after the Martin Luther King Jr. Day holiday.
The 10-year Treasury yield rose to 1.818% — its highest level since January 2020 — up from Friday's 1.771%. Bond yields move inversely to prices.
Here's where US indexes stood shortly after the 9:30 a.m. ET open on Tuesday:
- S&P 500: 4,609.03, down 1.15%
- Dow Jones Industrial Average: 35,472.70, down 1.22% (439.11 points)
- Nasdaq Composite: 14,631.95, down 1.78%
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.
Estimates published after the Federal Open Market Committee's December meeting show officials expect to hike interest rates three times in 2022 and another three times next year. But last week, Fed Chair Jerome Powell hinted during his confirmation hearing that the central bank is open to raising rates further in 2022 should inflation prove more stubborn than expected.
The Fed has last year signaled that it's going to raise interest rates in 2022. It has, since then, already started slowing bond purchases, as it tackles the strongest inflation since the 1980s.
Tech stocks, which have largely benefitted from a low-interest-rate environment, have started to feel the pressure.
Inflation remained the top investor concern based on Bank of America's January US Credit Investor Survey. Rising interest rates followed as a close second, Yuri Seliger, the bank's credit strategist, said in a Tuesday note.
Elsewhere, Goldman Sachs fell after missing estimates for its fourth-quarter earnings report. The stock fell as much as 4% in premarket trading. Banks kicked off earnings season last week Friday with JPMorgan, Citigroup, and Wells Fargo posting fourth-quarter results.
In cryptocurrencies, bitcoin extended its losses to trade below $42,000 as the risk-off sentiment hurting tech stocks weighs on the crypto. Ethereum, the second-largest digital asset, was also trading lower on the back of a broader sell-off in digital assets.
West Texas Intermediate crude oil rose as much as 0.61% to $82.62 per barrel. Brent crude, oil's international benchmark, jumped as much as 0.76% to $85.11 per barrel. Both were trading at highs not seen since the fall of 2014.
Gold ticked up by 0.08% to $1,817.90 per ounce.