Stocks Settle Lower as Bond Yields Surge

On Tuesday, stocks experienced a decline as bond yields surged to multi-year highs, prompting concerns about persistent inflation and global central bank interest rate hikes. The S&P 500 closed down by -0.71%, the Dow Jones Industrial Average by -0.79%, and the Nasdaq 100 Index by -1.29%. E-mini S&P futures and September E-mini Nasdaq futures also posted significant losses.

The decline in stock indices reflected weaker-than-expected US economic data, including a drop in the August ISM manufacturing index to 54.6, below expectations of 55.2. Additionally, July construction spending fell by -0.5%, and July JOLTS job openings unexpectedly increased by 89,000 to 7.271 million. Fed Governor Michael Barr's hawkish comments on Tuesday further dampened the market sentiment, expressing concern over insufficient inflation moderation and calling for decisive interest rate hikes.

Surging oil prices, particularly WTI crude oil, contributed to the inflation expectations surge, while geopolitical tensions in the Middle East further added to the market's unease.