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U.S. stocks fell on Tuesday, with tech names dragging down the broader markets as Treasury yields traded near three-month highs and lawmakers in Washington continued their budget stalemate.
The Dow Jones Industrials plummeted 473.52 points, or 1.4%, to 34,395.85,
The S&P 500 fell 78.31 points, or 1.8%, to 4,366.15.
The NASDAQ Composite cratered 347.82 points, or 1.5%, to 14,621.92, its worst day since May.
Tech shares were dropping in morning trading as a rapid rise in rates makes their future cash flows less valuable, and in turn makes the popular stocks appear overvalued. Higher rates also hinder tech companies’ ability to fund
Tech shares fell as a rapid rise in rates makes their future cash flows less valuable, and in turn makes the popular stocks appear overvalued. Higher rates also hinder tech companies’ ability to fund their growth and buy back stock.
Facebook and Alphabet shares lost more than 3%, while Amazon dropped 2.9%. Large chip stocks struggled, with Nvidia sliding 4%.
The drop in tech dragged down sentiment on the markets though there were pockets of strength. Energy stocks like Exxon rose in early trading as WTI crude topped $76 a barrel. Shares of Ford rose 1.4% after the company announced plans to build new production facilities in the U.S.
While tech stocks dragged down the broader market, sectors tied to the economic reopening outperformed and energy names saw a slight gain. Shares of Ford rose 1.3% after the company announced plans to build new production facilities in the U.S.
Also weighing on sentiment was a budget showdown in Washington. Senate Republicans blocked a House-passed bill Monday that would have funded the government into December and suspended the debt ceiling until December 2022.
Congress must approve government funding by Friday to avoid a shutdown, and Treasury Secretary Janet Yellen warned Congress in a letter on Tuesday that lawmakers need to raise the debt limit by Oct. 18 to avoid a government default.
Thursday marks the final day of trading of September and the third quarter. The Dow is down 1.4% for the month, and the S&P 500 is off by
1.8%. The NASDAQ has lost 1.9% in September.
Prices for 10-Year Treasurys sagged, raising yields to 1.52% from Monday’s 1.49%. Treasury prices and yields move in opposite directions.
Oil prices lost 42 cents to $75.03 U.S. a barrel.
Gold prices subtracted $13.50 to $1,738.50 U.S. an ounce.
