by Lewis Krauskopf, Ankika Biswas and Shashwat Chauhan

(Reuters) – The New York Stock Exchange ended sharply lower on Tuesday as the yield on 10-year U.S. Treasury bonds held at a multi-year high, amid concerns over the prospect that interest rates remain high for longer than expected and their potential impact on the economy.

The Dow Jones index fell 1.14%, or 388 points, to 33,618.88 points.

The broader S&P-500 lost 63.91 points, or 1.47%, to 4,273.53 points.

The Nasdaq Composite fell 207.71 points (1.57%) to 13,063.61 points.

Another reason for concern for investors: the specter of a partial closure of the American federal administrations (“shutdown”), starting on Sunday, if no compromise is obtained in the budget negotiations in Congress. Moody’s warned that this would affect the United States’ credit rating.

The Dow Jones recorded its largest one-day percentage decline since last March.

Bond yields have risen to 16-year highs since the US Federal Reserve (Fed) suggested after its policy meeting on Wednesday that there would be no interest rate cuts until 2025, dashing hopes of monetary easing during next year.

It is possible that US Treasuries will continue to rise until the release of data on US household spending on Friday, which will provide a new element on inflation, said Jack Janasiewicz, portfolio manager at Natixis.

Investors are also awaiting comments this week from Fed officials, including the president of the US central bank, Jerome Powell.

“We continue to adjust to higher interest rates,” said Brad McMillan, chief investment officer of Commonwealth Financial Network.

“There is a growing feeling that the market is overvalued… and that this is not sustainable, which is scaring off buyers,” he added.

All major sectors of the S&P-500 finished in the red. Sensitive to interest rates, utilities and real estate fell by 3.05% and 1.8% respectively, while technologies lost 1.8%.

On the value side, high-growth stocks, catalysts for Wall Street’s rebound this year, mostly declined on Tuesday, including Amazon, down 4% after the announcement of a legal complaint filed by the American federal regulator. competition for abuse of dominant position.

( Jean Terzian)

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