Stocks resume downward path as rising yields, trade jitters jolt investors.
U.S. stocks were back on the defensive Tuesday, rattled by falling bond yields and the threat of a breakdown in U.S.-China trade negotiations.
All of Wall Street’s major benchmarks finished firmly lower. The large-cap S&P 500 Index (NYSEARCA:SPY) fell 3.2% to 2,700.07. Ten of 11 primary sectors finished lower, with industrials and information technology shares leading the declines.
The Dow Jones Industrial Average (NYSEARCA:DIA) plunged 799.36 points, or 3.1%, to 25,027.07. Caterpillar and JPMorgan were among the worst performers.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) fell 3.8% to close at 7,158.43..
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) surged on Tuesday, as jitters returned to Wall Street. The so-called “far index” climbed 27.3% to 20.92 on a scale of 1-100 where 20 represents the historic average.
In commodities, oil prices extended gains Tuesday as traders shifted their attention to an upcoming OPEC meeting. The Organization of the Petroleum Exporting Countries (OPEC) is widely expected to scale back production on Thursday when it meets in Vienna, Austria.
U.S. West Texas Intermediate (WTI) futures gained 27 cents, or 0.5%, to $53.22 a barrel on the New York Mercantile Exchange. ICE Brent futures climbed 49 cents, or 0.8%, to $62.18 a barrel.
U.S. government bond yields declined further on Tuesday in a sign that markets were worried about the domestic economy. The yield on the 10-year Treasury tumbled to 2.926%.
The Final Word: Optimism that the United States and China will resolve their trade dispute seemingly faded on Tuesday, leaving investors concerned about the next 90 days. That’s the grace period presidents Trump and Xi agreed to over the weekend.