US stocks dropped on Tuesday after Treasury yields once again hit a new cycle high.
The 10-year yield jumped to a high of 4.75%, which is well above the 3.64% level it was at a year ago.
Higher bond yields have led to increased competition for stocks as investors can grab a risk-free yield of 5%.
US stocks fell on Tuesday after interest rates surged to a new cycle high, with the 10-year Treasury yield jumping to 4.75%, the highest since August 2007.
The latest surge comes a day after Cleveland Fed President Loretta Mester said that one more rate hike might be necessary later this year. The market currently expects no hikes at the Fed's upcoming November and December meetings, so any further increases would be a surprise to investors.
"I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred," she told a group of business leaders on Monday.
Mester, who is not a voting member of the Fed this year, said inflation is still too high and risks related to persistently high inflation remain skewed to the upside.
Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Tuesday:
S&P 500: 4,266.29, down 0.52%
Dow Jones Industrial Average: 33,291.96, down 0.42% (141.39 points)
Nasdaq Composite: 13,229.09, down 0.59%
Here's what else is going on today:
Orange juice prices are up 270% since the pandemic hit, as crop diseases and hurricanes hammer supply.
Warren Buffett's Berkshire Hathaway has now cashed in $540 million of HP stock in under a month.
Shares of embattled Chinese real-estate developer Evergrande surged as much as 42% in 15 minutes after the stock resumed trading on Tuesday.
In commodities, bonds, and crypto:
Gold fell 0.34% to $1,840.90 per ounce.
The yield on the 10-year Treasury bond jumped six basis points to 4.75%.
Bitcoin edged up 0.08% to $27,529.
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