The Dow Jones Industrial Average dropped more than 500 points on Tuesday as the 10-year Treasury yield surged to its highest level since 2007. The move came as traders priced in a rate hike at the Federal Reserve's meeting this week, while oil prices climbed on Middle East conflict.
The Dow Jones Industrial Average skidded more than 500 points, a drop of 1%. This came as the 10-year Treasury yield climbed to its highest levels in 19 years. The S&P 500 posted a lighter decline of 0.3%. The Nasdaq composite slipped 0.7%.
Treasury yields hit a 19-year high
Benchmark yields jumped across the curve. The 10-year yield scaled to 5.041% earlier in the session, the highest since July 2007, before easing back to around 5%. The 30-year Treasury bond rose to a high of 5.401%, also its highest level since June 2007. The 2-year Treasury note reached 4.688% earlier in the session, its highest since July 2024.
Rate-hike bets and oil prices add pressure
The move comes at the start of the Fed's two-day policy meeting, as traders weigh a possible rate hike. Markets are pricing more than a 92% chance of a quarter-point increase when the meeting concludes Wednesday. That comes after August inflation remained well above the Fed's 2% target. WTI crude topped $102 a barrel as the Iran conflict dragged on and the Strait of Hormuz remained essentially blocked. Separately, WTI futures popped more than 2% to around $103.75 a barrel as Saudi Arabia launched air attacks amid ongoing clashes with Houthi forces in Yemen.
Winners and losers on the day
Inside the Dow, Chevron gained more than 1%. Nvidia rose nearly 1% as well. Nike and Goldman Sachs were the worst laggards, each falling around 2%. Axon Enterprise plunged more than 10% after announcing a proposed $1 billion offering of convertible senior notes. Bitcoin also dropped nearly 4% to below $76,000 per token.
Sources: CNBC, Investor's Business Daily
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