NEW YORK: US stocks were under pressure on Tuesday, with most sectors taking a hit as government bond yields resumed their uptrend, though gains in AI-linked stocks on optimism about Anthropic’s plan to go public helped limit losses.
The yield on the benchmark 10-year Treasury bond climbed to 5.278percent — near its highest level since 2007 — and the one on the 30-year maturity was at its highest since 2002.
“Pressure is building on equities… Markets are feeling the squeeze from several directions this week,” said Lukman Otunuga, head of Market Research at FXTM.
Higher yields raise the cost of capital and dent the relative appeal of equities, while raising the discount rate applied to companies’ future earnings.
Oil prices retreated slightly on Tuesday but held near recent highs, fuelling inflation concerns. Brent crude futures were around the USD105 per barrel mark.
There were no signs of progress towards a peace deal between the US and Iran. President Donald Trump earlier said he has offered Iran nothing to end the war, rejecting media reports that he was willing to extend some relief from sanctions.
Nine of the 11 sectors on the S&P 500 were trading lower, with consumer staples and health care leading declines, down around 1percent each. Chipmakers helped offset some declines as they recovered from Monday’s sharp fall. The broader Philadelphia chips index climbed 1.8percent.
Megacap and growth stocks were mixed. Meta Platforms and Nvidia advanced, while Alphabet fell 1.2percent and Apple dropped 2percent. Tech stocks were in focus as Anthropic’s IPO prospectus showed how the AI lab has grown sharply in the last year but also posted wider losses.
The company is targeting a USD2 trillion-plus valuation, possibly setting a benchmark for how Wall Street measures AI leaders.
At 11:50 a.m. ET, the Dow Jones Industrial Average fell 279.70 points, or 0.54percent, to 51,201.81; the S&P 500 lost 16.48 points, or 0.21percent, to 7,667.30, and the Nasdaq Composite lost 17.30 points, or 0.06percent, to 26,803.08.
US consumer confidence, meanwhile, dropped to the lowest level in more than 12 years in September, while a separate reading showed job openings reduced in August.
Economic data has been under scrutiny, with the Federal Reserve dialling back commentary on policy outlook under Chair Kevin Warsh. “The case for another Fed hike is getting stronger,” Otunuga said. Traders currently see a 68percent chance of another interest rate hike in October, according to the CME FedWatch Tool. At least six Fed officials, including New York Fed President John Williams, are set to speak on Tuesday.
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