Chipmakers dropped 4%. Benchmark 10-year U.S. Treasury yields were at 3.08% after hitting their highest levels since November 2018 earlier in the session as expectations of higher interest rates unnerved investors. After a 50 basis points increase in interest rates this month by the U.S. central bank, many traders expect a hike of another 75 basis points at the June meeting. “The concern here is that the Federal Reserve is going to essentially ignore market conditions and equity market volatility and continue on with rate hikes,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management. At 11:52 a.m. ET, the Dow Jones Industrial Average was down 486.39 points, or 1.48%, at 32,412.98, the S&P 500 was down 93.43 points, or 2.27%, at 4,029.91, and the Nasdaq Composite was down 373.29 points, or 3.07%, at 11,771.38. Investors will keep a close eye on U.S. inflation data for April for clues on whether price pressures are reaching a peak.
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On Monday, the S&P 500 index plummeted to its lowest level since April 2021, as higher US Treasury yields weighed on growth stocks on expectations of aggressive policy tightening, and investors worried about a sudden economic slowdown in China. The 11 major S&P sectors all fell. The energy sector fell 6% on the basis of a 2% decline in oil prices, as bad Chinese data and a tighter COVID-19 shutdown in Shanghai fueled concerns about a worldwide recession. Microsoft Corp, Amazon.com, Apple Inc, Google-owner Alphabet Inc, Meta Platforms, and Tesla Inc all plummeted between 1.6 percent and 6.2 percent, bringing the Nasdaq to its lowest level since November 2020.
“You have to look pretty hard for positive catalysts in the current market environment,” said Brian Price, head of investment management, Commonwealth Financial Network. “Any positive developments on the geopolitical front, or a weaker than expected CPI report later this week, could help turn the tide and see investors embrace risk assets once again.” Technology-focused growth stocks have borne the brunt of the selloff this year as their returns and valuations are discounted more deeply when yields rise. The S&P 500 growth index has dropped 23.4% so far this year, compared to a 15.5% fall in the benchmark index . The first-quarter earnings season is on its final leg, with nearly 80% of the 434 S&P 500 companies that have reported results so far topping estimates, according to Refinitiv. Twitter Inc slipped 2.2% as Hindenburg Research took a short position on the social media company’s stock, saying the company’s $44 billon deal to sell itself to Elon Musk has a significant risk of getting repriced lower. Declining issues outnumbered advancers for a 7.03-to-1 ratio on the NYSE and for a 5.36-to-1 ratio on the Nasdaq. The S&P index recorded one new 52-week highs and 66 new lows, while the Nasdaq recorded 11 new highs and 1,030 new lows.