US markets end lower as yield spike; Dow falls 570 points

The Nasdaq Composite dropped 2.83% to 14,546.68 for its worst day since March.

Sep 29, 2021 08:09 IST India Infoline News Service

US equities on Tuesday fell sharply as sharp rise in bond yield sparked selling pressure in rate sensitive technology sector and growth-oriented stocks. 10-Year USA treasury yield rose by 7bps to 1.55% for six straight day’s and touching its highest level since June’21. "No place to hide" as midcaps take a pounding also as strength in US$ index sees emerging markets also take a hit.

The Nasdaq Composite dropped 2.83% to 14,546.68 for its worst day since March. The S&P 500 shed 2.04% to finish at 4,352.63 and the Dow Jones Industrial Average lost 570 points, or 1.63%, to close at 34,299.99.

Stocks like Facebook, Microsoft and Alphabet lost more than 3%, while Amazon dropped more than 2%. Large chip stocks struggled, with Nvidia sliding 4.5%.

The up-move in bond yield shows that investors have started anticipating the Federal Reserve may move away from accommodative stance on concerns of elevated inflation. Fed, it its latest policy meet, hinted hike in interest rate in 2022. In addition to rise in bond yield, failure of removing or increasing debt ceiling in the USA by mid of Oct’21 could be a bigger risk. This may prompt Federal government to default first time in history, which can have a widespread impact of global markets. 

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