22 August (Reuters) The major Wall Street indexes fell in turbulent trading on Tuesday as U.S. Treasury yields reached multi-year highs amid rising concerns that interest rates may remain high for longer. At the same time, shares of Nvidia fell ahead of the chip designer’s earnings.
Following the downgrading of numerous regional U.S. institutions by S&P, major U.S. banks like JPMorgan, Wells Fargo, and Bank of America fell between 1% and 1.8%, which further weighed on markets.
The KBW regional banking index dropped 2.0% and the S&P 500 banks index dropped 1.8%.
On Tuesday, the benchmark 10-year Treasury yield reached almost 16-year highs. The bond selloff was caused by worries that the Federal Reserve would maintain high interest rates for some time given signs of a robust U.S. economy.
According to Bob Doll, chief investment officer of Crossmark Global Investments, “there is fear about interest rates rising (and) if inflation will continue to decline.
People are paying attention to these uncertainties now, which were present in July when the market was rising straight up, and that is what is causing the sloppiness.
Due to a surge in Nvidia and other tech stocks on Monday ahead of the chip designer’s second-quarter report on Wednesday, Wall Street had made some gains.
Following a stunning report last quarter that ignited a ferocious rise in tech stocks amid the excitement surrounding artificial intelligence, investors will be interested to see if Nvidia’s earnings and projection can live up to elevated market expectations.
Nvidia shares reached a record high of $481.87 shortly after markets started, but they ended the day down 3.2%.
Other significant technology and growth companies also limited gains, with Microsoft up 0.5%, Amazon.com flat, and Tesla down 0.4%.
Friday’s conference in Jackson Hole, where Federal Reserve Chair Jerome Powell will speak, will be eagerly watched by investors for any hints on the trajectory of American interest rates.
The odds of a 25 basis point rate hike in November have increased to nearly 39% from roughly 35.8% a week ago, according to CME Group’s FedWatch tool, while trader bets on a pause in rate hikes next month stand at 84.5%.
At 12:15 p.m. ET, the S&P 500 was down 12.43 points, or 0.28%, at 4,387.34, and the Nasdaq Composite was down 3.08 points, or 0.02%, at 13,494.51. The Dow Jones Industrial Average was down 168.92 points, or 0.49%, at 34,294.77.
In addition, Lowe’s Cos stock increased 3.3% after the home improvement store beat quarterly earnings forecasts.
Following a warning from the department store giant about lacklustre customer spending during the important holiday shopping season, Macy’s stock fell 13.3%, pulling down the whole retail sector by 0.3%.
Following the “Call of Duty” developer’s proposed sale of its streaming rights to Ubisoft Entertainment in a new attempt to obtain approval from Britain’s anti-trust authority for its $69 billion sale to Microsoft, Activision Blizzard saw its stock rise by 1.0%.
On the NYSE and the Nasdaq, declining issues outpaced advancing issues by a ratio of 1.27 to 1 and 1.52, respectively.
The Nasdaq posted 31 new highs and 164 new lows, compared to the S&P index’s three new 52-week highs and 12 new lows.