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The major averages fell sharply Tuesday after Goldman Sachs reported disappointing earnings and as government bond yields hit COVID-era highs.
The Dow Jones Industrials plummeted 545.89 points, or 1.5%, to 35,365.92,
The S&P 500 fell 62.72 points, or 1.4%, to 4,600.13,
The NASDAQ Composite slumped 166.9 points, or 1.1%, to 14,726.85.
U.S. markets were closed Monday for Martin Luther King Day.
Goldman Sachs shares ticked more than 8% lower on Tuesday after the bank missed analysts’ expectations for its fourth-quarter earnings. Goldman’s operating expenses surged 23% on increased pay for Wall Street employees.
Elsewhere, Microsoft dipped 2.5% after announcing the software giant will buy video game company Activision Blizzard in an all-cash transaction valued at $68.7 billion. Shares of Activision Blizzard surged 30%.
gap stocRetailer Gap shares fell 6.4% after Morgan Stanley downgraded the retailer.
Technology stocks declined on Tuesday, continuing their downward trend in 2022 as interest rates rise. Higher rates typically hurt growth pockets of the market that rely on low rates to borrow for investing in innovation. And their future earnings look less attractive when rates are spiking.
Tesla dropped 2.5% on Tuesday. Meta Platforms dropped 3.7%, and Amazon fell 2.5%.
The shortened trading week will feature quarterly reports from 35 companies in the S&P 500, including Bank of America, UnitedHealth and Netflix.
Major banks Wells Fargo, JPMorgan Chase and Citigroup kicked off the earnings season on Friday, with the three companies posting better-than-expected profits. However, the market’s reaction to those results was mixed. Wells Fargo shares posted a gain on the back of those results, but JPMorgan Chase and Citigroup slid.
Prices for 10-year Treasurys tumbled, raising yields to 1.85% from Friday’s 1.79%. Treasury prices and yields move in opposite directions.
Oil prices added 96 cents to $84.78 U.S. a barrel.
Gold prices ditched 60 cents to $1,815.90 U.S. an ounce.
