Wall Street indices, including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, experienced a downturn on Tuesday due to surging Treasury yields. The 10-year and 30-year yields reached their highest levels in 16 years, triggering a selloff in bonds and putting a damper on stock market enthusiasm. Concurrently, the Russell 2000 index turned negative for the year.
The Federal Reserve's hawkish stance, affirming no immediate rate cuts due to the resilient US economy, has resulted in increased borrowing costs and heightened probabilities of a rate hike in November according to CME's FedWatch tool. These developments have led to an escalation in oil prices and growth in the dollar value.
The Federal Reserve's approach has been influenced by the latest JOLTS report indicating more US job openings and Cleveland Fed President Loretta Mester's inclination towards a rate hike. This is causing investors to shift their focus to upcoming economic readings, next week's earnings season, and the September US jobs report.
The rising Treasury yields and no near-term Federal Reserve interest rate reduction are contributing to Wall Street's escalating selloff. Major market indices like the S&P 500, Dow Jones, and Nasdaq saw considerable declines as investors grapple with sustained high borrowing costs and a potential November rate hike.
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