After falling sharply early in the session, stocks continue to see significant weakness in mid-day trading on Tuesday. The sell-off on the day comes after the major averages turned in a mixed performance during the previous session.
Currently, the major averages are all posting steep losses on the day. The Dow is down 489.46 points or 1.4 percent at 34,379.91, the Nasdaq is down 376.32 points or 2.5 percent at 14,593.65 and the S&P 500 is down 82.69 points or 1.9 percent at 4,360.42.
Technology stocks have helped lead the move to the downside on the day amid a continued advance by treasury yields.
Extending the upward move seen since last week’s announcement from the Federal Reserve, the yield on the benchmark ten-year note has reached its highest levels in over three months.
The increase in treasury yields, which move opposite of bond prices, comes as the Fed has signaled plans to begin scaling back its asset purchases in the near future.
Also contributing to the continued advance by yields, Federal Reserve Chair Jerome Powell warned members of the Senate Banking Committee about upside risks to inflation during testimony this morning.
In prepared remarks, Powell predicted inflation will remain elevated in the coming months before moderating.
“As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors,” Powell said.
He added, “These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2 percent goal.”
Powell warned supply bottlenecks, hiring difficulties, and other constraints could prove to be greater and more enduring as the economic reopening continues, posing upside risks to inflation.
“If sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal,” the Fed chief said.
Adding to the negative sentiment on Wall Street, the Conference Board released a report unexpectedly showed a continued deterioration in U.S. consumer confidence in the month of September.
The Conference Board said its consumer confidence index tumbled to 109.3 in September from an upwardly revised 115.2 in August.
The decrease surprised economists, who had expected the index to inch up to 114.8 from the 113.8 originally reported for the previous month.
Semiconductor stocks are turning in some of the market’s worst performances on the day, resulting in a 3.5 percent slump by the Philadelphia Semiconductor Index.
Substantial weakness also remains visible among software stocks, with the Dow Jones U.S. Software Index tumbling by 3.4 percent.
Steel stocks have also shown a significant move to the downside on the day, dragging the NYSE Arca Steel Index down by 2.3 percent.
Retail, housing and biotechnology stocks are also seeing considerable weakness, moving lower along with most of the other major sectors.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index edged down 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 U.K.’s FTSE 100 Index fell by 0.5 percent, the German DAX Index and the French CAC 40 Index plunged by 2.1 percent and 2.2 percent, respectively.
In the bond market, treasuries have climbed off their worst levels but remain in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.3 basis points at 1.527 percent.
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