Stock markets finish mostly lower on Tuesday as rising bond yields weigh on investor sentiment.
U.S. stocks finished mixed on Tuesday, as rising bond yields and the threat of an escalating trade war with China continued to dampen investors’ appetite.
The large-cap S&P 500 Index (NYSEARCA:SPY) edged down 0.1% to close at 2,880.34. Despite the loss, five of 11 primary sectors finished in positive territory, led by a sharp increase in energy stocks.
Dow industrials (NYSEARCA:DIA) fell 56.95 points, or 0.2%, to 26,429.83.
Meanwhile, the technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) pared gains to finish flat at 7,738.02.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) rose on Tuesday, notching its fourth straight gain. The so-called “fear index” inched up 2.4% to close at 16.06 on a scale of 1-100 where 20 represents the long-term average.
The prospect of higher interest rates continued to weigh on markets following a rapid acceleration of government bond yields. The yield on U.S. 10-year Treasuries surged last week to the highest since 2011. The yield on short-term debt spiked to levels not seen since 2008.
Yields could continue higher in the short run as markets price in a fourth interest rate hike by December. The Federal Reserve is widely expected to hike rates amid an improving domestic economy.
The Final Word: Chinese equity markets have been under fire as of late after the country’s central bank failed to stem growing concerns over a U.S.-led trade war. It remains to be seen whether Chinese tumult will impact markets back home.