Interest Rate Worries Contribute To Sell-Off On Wall Street

(RTTNews) - Following the mixed performance seen last Friday, stocks moved sharply lower over the course of the trading session on Tuesday. With the steep drop on the day, the Dow and the S&P 500 ended the session at their lowest closing levels in a month.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow tumbled 697.10 points or 2.1 percent to 33,129.59, the Nasdaq plunged 294.97 points or 2.5 percent to 11,492.30 and the S&P 500 dove 81.75 points or 2 percent to 3,997.34.

The sell-off on Wall Street partly reflected ongoing concerns about the outlook for interest rates amid a sharp increase in treasury yields.

The benchmark ten-year yield more than offset the dip seen last Friday, reaching its highest closing level in over three months.

Recent economic data has led to worries the Federal Reserve may raise rates higher than currently anticipated and keep rates at an elevated level for an extended period.

On Wednesday, the Fed is scheduled to release the minutes of its latest monetary policy meeting, which could shed additional light on the outlook for interest rates.

Geopolitical concerns also weighed on the markets after Russian President Vladimir Putin said he is suspending Russia's participation in a nuclear arms treaty with the U.S.

The announcement by Putin comes after U.S. President Joe Biden made a surprise visit to Ukraine's capital Kyiv on Monday.

Home improvement retailer Home Depot (HD) led the Dow lower after reporting fourth quarter sales that missed analyst estimates and providing a downbeat forecast.

Sector News

Housing stocks turned in some of the market's worst performances on the day, dragging the Philadelphia Housing Sector Index down by 3.7 percent to its lowest closing level in almost a month.

The sell-off by housing stocks came following the release of a report from the National Association of Realtors unexpectedly showing a continued decrease in U.S. existing home sales in the month of January.

Substantial weakness also emerged among semiconductor stocks, resulting in a 3.3 percent plunge by the Philadelphia Semiconductor Index.

Airline stocks also saw considerable weakness on the day, as reflected by 3.3 percent nosedive by the NYSE Arca Airline Index. The index tumbled to its lowest closing level in well over a month.

Telecom, computer hardware and biotechnology stocks also showed notable moves to the downside amid broad based weakness on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index dipped by 0.2 percent, while China's Shanghai Composite Index climbed by 0.5 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index fell by 0.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index both slid by 0.5 percent.

In the bond market, treasuries once again came under pressure after ending last Friday's trading modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, surged 12.7 basis points to 3.955 percent.

Looking Ahead

Trading activity on Wednesday may be somewhat subdued ahead of the release of the Fed minutes relatively late in the session.