Key indices on the New York Stock Exchange fell on Tuesday towards the end of the trading session. According to The Wall Street Journal, the decline was dictated by a rise in long-term US government bond yields.
The U.S. Dow Jones Industrial Average fell 543.34 points (1.51%) to 35,368.47 points. The S&P 500 index fell 85.74 points (1.84%) to 4,577.11 points. The NASDAQ electronic exchange index fell 386.85 points (2.6%) to 14,506.9 points.
The Wall Street Journal notes that the decline of indices is occurring against the background of rising government bond yields. It is dictated by the US Federal Reserve (Fed) likely to raise the benchmark interest rate earlier than expected. The yield on 10-year government bonds rose to 1.866%, reaching the highest level in the pandemic.
"Markets are trying to adapt to a possible increase in the benchmark interest rate. Back in October, investors were expecting only one rate hike in 2022, but now we expect it to happen four times," the paper quotes Brooks Macdonald chief investment officer Edward Park as saying. In his opinion, the current situation reflects "the level of uncertainty in the financial markets regarding Fed policy".
Earlier it was reported that a strengthening economy and high inflation in the US could lead to an earlier-than-expected increase in the benchmark interest rate. Experts had predicted that the financial regulator would begin to raise the rate in March. The Fed kept the benchmark interest rate at 0-0.25% in December 2021.