FX.co ★ U.S. Stocks Extending Pullback Following Recent Surge By Treasury Yields

Stocks continued to decline on Tuesday, deepening the retreat initiated in the previous session. Both the Dow Jones Industrial Average and the S&P 500 are retracing after reaching record highs last Friday.

As it stands, the Dow has fallen by 211.18 points, or 0.5%, to 42,720.42, while the S&P 500 has decreased by 22.16 points, or 0.4%, to 5,831.82. The tech-centric Nasdaq is experiencing a more modest dip, down by 7.79 points, or less than 0.1%, to 18,532.22.

Renewed anxieties regarding interest rate forecasts are contributing to Wall Street's downtrend, especially in light of the recent surge in U.S. treasury yields. The yield on the ten-year Treasury note has climbed to its highest level in nearly three months, fueled by concerns over the U.S. fiscal deficit and Federal Reserve officials' commentary suggesting gradual rate cuts.

Following the Fed's interest rate reduction by 50 basis points last month, CME Group's FedWatch Tool indicates a 91.0% likelihood of only a 25 basis point rate cut next month.

A noteworthy 4.0% drop in Verizon (VZ) shares is also impacting the Dow negatively. This decline follows Verizon's third-quarter earnings report, which exceeded analyst projections but showed weaker-than-anticipated revenues.

Another Dow component, 3M (MMM), has also moved lower, despite the industrial giant's third-quarter earnings surpassing expectations.

Conversely, General Motors (GM) shares surged by 7.7%, driven by the auto giant's better-than-expected third-quarter results.

Sector Analysis

On the sector front, computer hardware stocks have experienced a noticeable downturn, leading to a 2.9% drop in the NYSE Arca Computer Hardware Index. Logitech (LOGI), in particular, has significantly contributed to the sector's downturn, plummeting 9.8% despite reporting favorable fiscal second-quarter results.

Housing stocks are also showing significant weakness, with the Philadelphia Housing Sector Index slumping by 2.7%, retreating further from the record high achieved last Friday.

Steel and networking stocks are similarly under pressure, whereas software and gold stocks have demonstrated strong upward momentum.

Global Markets

In global markets, the Asia-Pacific region had a mixed day. Japan's Nikkei 225 Index fell by 1.4%, while China's Shanghai Composite Index rose by 0.5%.

In Europe, the major stock markets remained relatively stable. The French CAC 40 Index stayed marginally above the flat line, whereas both the U.K.'s FTSE 100 Index and Germany's DAX Index hovered just below it.

In the bond market, U.S. treasuries exhibited limited movement throughout the session, with the yield on the ten-year note rising by less than a basis point to 4.190%, as it moves inversely to its price.