Wall Street collapses amid rising Treasury yields and growing inflation concerns

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A road sign is seen outside the New York Stock Exchange on Wall Street in New York on February 10, 2009. REUTERS / Eric Thayer / File Photo

  • Worst S&P 500 Day Since May, Nasdaq Worst Day Since March
  • Ford increases $ 11.4 billion investment with SK Innovation
  • Indices decline: Dow 1.63%, S&P 2.04%, Nasdaq 2.83%

NEW YORK, Sept.28 (Reuters) – Wall Street shares closed sharply lower on Tuesday in a broad wave of massive selling driven by rising U.S. Treasury yields, heightened concerns over continued inflation and the controversial debt ceiling negotiations in Washington.

The three major US stock indexes slipped nearly 2% or more, with interest-rate-sensitive tech stocks and tech-adjacent stocks weighing the most as investors lost their appetite for risk.

This was the largest single-day percentage drop in the S&P 500 Index (.SPX) since May and the largest on the Nasdaq since March.

The S&P 500 and the Nasdaq Composite Index (.IXIC) were on track for their biggest monthly declines since September 2020.

“The big picture is the sudden surge in yields over the past week, which has led to a ‘sell first, ask questions later’ mentality,” Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

“(But) there are several factors weighing on sentiment today,” added Detrick. “The back and forth in Washington with the debt ceiling and the spending bill and potential higher taxes weighed on the general investor psyche and led to a sell off.”

The benchmark was also heading for its weakest quarterly performance since the COVID pandemic brought the global economy to its knees.

The weakness has spread across most asset classes, including gold, suggesting a widespread sense of risk aversion.

U.S. Treasury yields continued to rise, with 10-year yields hitting their highest level since June, as inflation expectations escalated and fears grew that the U.S. Federal Reserve would shorten its tightening schedule of its monetary policy.

Treasury Secretary Janet Yellen said she expected inflation to end in 2021 at nearly 4% and warned lawmakers their failure to avoid a government shutdown as the country moves closer exhaustion of its borrowing capacity could cause “serious damage” to the economy. Read more

Senate Republicans appeared poised to reverse Democrats’ efforts to expand the government’s borrowing power and avoid a possible credit default in the United States. Read more

A Conference Board report showed consumer confidence unexpectedly weakened in September to its lowest level since February. Read more

The Dow Jones Industrial Average (.DJI) lost 569.38 points, or 1.63%, to 34,299.99; the S&P 500 (.SPX) lost 90.48 points, or 2.04%, to 4,352.63; and the Nasdaq Composite (.IXIC) lost 423.29 points, or 2.83%, to 14,546.68.

Half of the S&P 500 components closed 10% or more below their 52 week highs. This included 63 stocks that had fallen 20% or more.

Of the top 11 sectors in the S&P 500, all but energy (.SPNY) finished in the red, with technology (.SPLRCT) and communications services (.SPLRCL) suffering the largest percentage losses.

Communications services fell 2.8%, the industry’s largest single-day percentage decline since January. The S&P Growth Index (.IGX) closed at its lowest since July and posted its largest single-day percentage decline since February.

Microsoft Corp (MSFT.O), Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Alphabet Inc (GOOGL.O) weighed the heaviest on the S&P and Nasdaq, dropping between 2.4 % and 3.6%.

Ford Motor Co (FN) was one of the few bright spots, rising 1.1% on news it would join Korean battery partner SK Innovation (096770.KS) to invest $ 11.4 billion in the construction of an electric assembly plant for F-150 and three American batteries. plants. Read more

Falling issues outnumbered the winners on the NYSE by a 4.35 to 1 ratio; on the Nasdaq, a ratio of 4.52 to 1 favored the declines.

The S&P 500 posted 17 new 52-week highs and five new lows; the Nasdaq Composite recorded 54 new highs and 120 new lows.

The volume on the US stock exchanges was 12.27 billion shares, compared to an average of 10.37 billion over the last 20 trading days.

Reporting by Stephen Culp; Additional reporting by Noel Randewich and Sinead Carew in New York and Devik Jain in Bangalore; Editing by Richard Chang

Our standards: Thomson Reuters Trust Principles.


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