Shares fell as bond yields reached a two-year high

U.S. stock indices fell on Tuesday and bond yields hit a two-year high, with investors worried that the Federal Reserve will raise interest rates faster and more aggressively than expected.

Investors came to a holiday weekend that closed markets on Monday and sold shares across the board. All three indices fell, the S&P 500 fell 1.6%, the Dow Jones Industrial Average fell 1.6% and the Nasdaq Composite fell 1.8%.

Shares and securities have been in a state of turmoil since the beginning of the year, with all three criteria falling by at least 2.7% so far in 2022. The question is how much and how quickly the Federal Reserve will act in an effort to control widespread inflation. Investors are increasingly hoping that the central bank will implement four rate hikes this year.

Interest-rate futures markets indicate investors are betting on four to five interest rate hikes this year, from three to four Fridays

CME Team.

“Markets are still trying to quantify the rate hike. The market only expected a rate hike for 2022 in October, and now expects it to be four,” said Edward Park, chief investment officer at Brooks McDonald’s, a UK investment firm. Reflects uncertainty. “

This has led investors to dump stocks this year, with some tight sales focusing on high-growth stocks that will be less attractive in the context of a rising return rate.

The Cboe Validity Index, also known as the Wall Street Fear Cage, also known as the VIX, rose to -21.53, a one-month high.

Shares of technology stocks and other fast-growing companies were under pressure as yields on government bonds rose in January. On Tuesday, the benchmark 10-year Treasury note yield rose 1.827% to its two-year high of 1.771% on Friday, lowering bond prices.

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The latest quarterly earnings season did not help. Several financial institutions have reported that profits have begun to decline in some of the big banks that have benefited from the turbulent epidemic economy. Goldman Sachs released its latest report on Tuesday, which is one Decline in fourth-quarter profit, Shares fell 7.6%.

Shares of Alibaba, listed in the US, fell 1.4% after Reuters reported that Biden management was reviewing whether the e-commerce company Cloud Business poses a national security risk.

Meanwhile, stocks

Activision Blizzard

Then rose nearly 30%

Microsoft

Agreed to buy video game Heavyweight Claims about workplace misconduct. Microsoft shares have been flat in recent trading.

Investors expect the Federal Reserve to make several rate hikes this year.


Photo:

Timothy A. clary / Agence France-Presse / Getty Images

Oil prices soared as geopolitical tensions in the Middle East added to concerns about tight distribution. The Future for the West Texas Intermediate, a major quality of U.S. crude oil, A barrel increased 2% to $ 84.96. If the contracts are above $ 84.65 per barrel, it will indicate their maximum closing level after October 2014. Yemen’s pro – Iranian Houthi rebels say they are behind. Airstrikes in the United Arab Emirates On Monday, intense fighting spread across the region.

Overseas, the Pan-Continental Stoxx Europe 600 fell 1%, with huge losses in the technology and travel and leisure sectors. Shares

GAM Holding

The Swiss asset management company fell 14% after claiming a net loss of about $ 33 million for 2021.

The rise in treasury yields boosted bond yields worldwide. Benchmark 10-year German bond yield traded down to minus 0.005% on Tuesday, from minus 0.061% on Monday, on the verge of crossing positive terrain for the first time since 2019.

Business Web.

Although China’s Shanghai joint stock gained 0.8%, key Asian indices fell sharply. South Korea’s Kospi fell 0.9%, Japan’s Nikkei 225 0.3% and Hong Kong’s Hong Cheng 0.4%.

Last year saw the largest appreciation of the US dollar since 2015. This is good for many US consumers, but it could also have an impact on stocks and the US economy. Diane Roboin of the WSJ explains. Photo Description: Sebastian Vega / WSJ

Write to Caitlin Ostroff at [email protected]

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