On Tuesday, Wall Street experienced a substantial downturn, with the main indexes declining by over 1%, as 10-year Treasury yields maintained their multi-year highs. Investors grappled with the uncertain outlook for persistently elevated interest rates and the resulting economic consequences.
The Dow registered its most significant single-day percentage drop since March, while all three major indices closed at their lowest levels in more than three months.
Adding to investor concerns was the looming possibility of a partial U.S. government shutdown by the weekend. Moody’s (NYSE:MCO), a prominent ratings agency, cautioned that such an event could damage the country’s creditworthiness.
In the aftermath of the Federal Reserve’s recent hawkish long-term interest rate outlook, benchmark 10-year Treasury yields have surged to levels not seen in 16 years.
Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, remarked, “We continue to adapt to the higher interest rates. There’s an increasing sense that the market is overvalued… and a genuine feeling that this level of performance is unsustainable, deterring potential buyers.”
The Dow Jones Industrial Average declined by 388.00 points, or 1.14%, closing at 33,618.88. The S&P 500 lost 63.91 points, or 1.47%, settling at 4,273.53, while the Nasdaq Composite dropped 207.71 points, or 1.57%, ending the day at 13,063.61.
Every one of the 11 S&P 500 sectors ended the day in the red. The tech sector, a significant market influencer, declined by 1.8%, while the rate-sensitive utilities and real estate groups experienced losses of 3.05% and 1.8%, respectively.
The CBOE Volatility Index, commonly known as Wall Street’s “fear gauge,” concluded the day at its highest level since May 25.
Notably, the megacap stocks that have been the driving force behind this year’s market gains saw declines on Tuesday. Amazon.com (NASDAQ:AMZN) shares fell by 4% as the U.S. Federal Trade Commission filed a long-awaited antitrust lawsuit against the online retail giant.
Investors are eagerly awaiting Friday’s release of the personal consumption expenditures price index for fresh insights into the inflationary landscape. This week also brings additional economic data, including reports on durable goods and second-quarter gross domestic product, along with speeches from Federal Reserve policymakers, including Chair Jerome Powell.
In corporate news, shares of Immunovant (NASDAQ:IMVT) surged by an impressive 97% following the release of positive early-stage data related to the drug developer’s experimental antibody treatment, which exceeded analysts’ expectations.
Declining issues significantly outnumbered advancing ones on the NYSE, with a ratio of 5.9-to-1. On the NYSE, 37 new highs were recorded, contrasted with 388 new lows.
Similarly, on the Nasdaq, declining issues surpassed advancing ones with a ratio of 2.1-to-1. The Nasdaq registered 35 new highs and 390 new lows.
Approximately 10.2 billion shares exchanged hands in U.S. exchanges, in line with the daily average over the last 20 sessions.
