(C) Reuters. FILE PHOTO: A street sign is seen in front of the New York Stock Exchange on Wall Street in New York, February 10, 2009. REUTERS/Eric Thayer/File Photo
By Devik Jain
(Reuters) -The S&P 500 and the Nasdaq headed for their worst day in four months on Tuesday as weak consumer confidence data deepened concerns over slowing economic growth, while a surge in Treasury yields hit mega-cap technology stocks.
At 11:53 a.m. ET, the Dow Jones Industrial Average was down 516.54 points, or 1.48%, at 34,352.83.
The S&P 500 was down 88.15 points, or 1.98%, at 4,354.96, and the Nasdaq Composite was down 408.64 points, or 2.73%, at 14,561.33, both tracking their worst day since early May.
U.S. consumer confidence this month unexpectedly fell to its lowest since February, as soaring COVID-19 infections intensified concerns about the economy’s near-term prospects.
The reading, coupled with a rising trade deficit and an expected decline in vehicle sales, brewed fresh concerns about the state of consumption in the country, which is a key driver of economic growth.
“It seems like all these headwinds are hitting at the same time – potential higher taxes, higher inflation, uncertainty about the Delta variant, earnings and higher interest rates … are weighing heavily on the indexes,” said Ken Mahoney, chief executive officer of Mahoney asset management.
“Now with the 10-year going hotter, it spooked investors (because) if yields are going to go higher, there’ll be more competition for stocks which something investors really didn’t have to deal with for the last couple of years.”
Progress on U.S government funding negotiations was also in focus with Democrats scrambling to prevent a government shutdown and a potentially economically crippling U.S. credit default on Tuesday while also trying to agree on a mammoth tax and spending package.
Concerns over a shutdown, coupled with seasonally weak trends this month, put the S&P 500 on course for its worst monthly drop since October last year.
Treasury yields surged as investors priced in higher inflation in 2021, as well as an eventual interest rate hike by the Federal Reserve next year. [US/]
These stocks have benefited from the low-interest rate environment since the start of the pandemic. [US/]
The Russell 1000 growth index was set for its worst day since February.
Ten of the 11 major S&P sectors declined, with energy the sole gainer.
Federal Reserve Chair Jerome Powell said the U.S. economy is still far from achieving maximum employment in a hearing before the U.S. Senate Banking Committee, while also flagging concerns over prolonged difficulties in a post-COVID economic reopening.
Among other stocks, Ford Motor (NYSE:F) Co rose 1.3% after the U.S. automaker and its Korean battery partner SK Innovation said they would invest $11.4 billion to build an electric F-150 assembly plant and three battery plants in the United States.
Declining issues outnumbered advancers for a 5.13-to-1 ratio on the NYSE and for a 4.57-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and five new lows, while the Nasdaq recorded 39 new highs and 90 new lows.
Wall St tumbles on weak consumer sentiment, rising bond yields