US MARKET CLOSE | Major Indexes Fall as 10-Year Treasury Yield Hits 19-Year High, Oil Rebounds Ahead of Fed Decision
US stocks fell for a second straight session on Tuesday as investors positioned for Wednesday's Federal Reserve interest-rate decision and reacted to an article by Anthropic CEO Dario Amodei on AI safety concerns, while Treasury yields surged to multi-year highs, according to Sina Finance. The Dow fell 328.09 points, or 0.63%, to 52,093.10; the S&P 500 dropped 34.25 points, or 0.45%, to 7,585.73; and the Nasdaq lost 204.84 points, or 0.78%, to 25,981.57. Among the "Magnificent Seven," Meta and Nvidia posted modest gains, Amazon fell more than 2%, Google and Microsoft dropped more than 1%, and Apple and Tesla edged lower. Coherent rose nearly 2%, Super Micro gained 2%, and Qualcomm advanced more than 4%. Crypto-related stocks broadly declined, with Circle down more than 11%, Bitmine off more than 8%, Strategy down more than 5%, and Robinhood falling more than 3%. Oil stocks broadly rose, with Devon Energy and ConocoPhillips up more than 3%; Occidental, Chevron, and ExxonMobil gained more than 2%; and Halliburton rose nearly 2%. SoftBank Group's ADR climbed more than 9%. The benchmark 10-year Treasury yield rose to its highest level since 2007, reaching 5.041%. Bond yields move inversely to prices. The yield later retreated from its high, most recently up more than 3 basis points at 5.00%. In recent weeks, global bond yields have been a focus for equity markets, as government bonds were sold off amid growing concerns that the ongoing US-Iran war would push up inflation and that central banks were turning hawkish. "Investors are finally starting to confront these concerns," said Melissa Brown, head of global investment decision research at SimCorp. Beyond US government debt surpassing $40 trillion and inflation "stubbornly staying high," Brown added that oil breaking above $100 per barrel "put people on alert." Oil moved higher after Saudi Arabia shut a key pipeline bypassing the Strait of Hormuz, with Brent crude futures settling above $105 per barrel on Monday and West Texas Intermediate settling above $101. On Tuesday, crude extended gains, with Brent futures for November delivery up nearly 3% at $108.75 per barrel, while WTI futures rose more than 4% to $105.83. With Treasury yields and oil prices continuing to rise, markets are also watching the Fed's policy rate decision expected Wednesday. Federal funds futures show a more than 94% probability the central bank will raise rates by 25 basis points from the current 3.5% to 3.75% target range. Barclays strategists said in a Tuesday note that higher rates were already pressuring valuations and increasingly putting equity portfolios at risk. "While earnings have offset the drag so far, the 10-year yield approaching the 5% threshold marks a historically important inflection point, above which rates typically become a more persistent headwind for stocks," they said.