Wall Street Sell-Off Worsens, VIX Spikes As Bond Yields Rise Further, Dollar Strengthens: What's Driving Markets Tuesday?

It’s a red Tuesday for the U.S. stock market, with all major indices on Wall Street plummeting by over 1% during midday trading in New York.

This downward spiral can be attributed to the relentless surge in yields on U.S. Treasuries. The 10-year yield has shattered the 4.75% barrier, reaching levels not seen since August 2007, while the 30-year yield has surged past 4.9%, inching closer to the significant 5% milestone.

On the data front, job openings in August have surpassed expectations by adding 690,000 positions, bringing the total to 9.6 million, underscoring the strong resilience of the American labor market.

Meanwhile, the U.S. dollar continues its unyielding strengthening, exacerbating risk aversion sentiments. The U.S. Dollar Index (DXY) has surged beyond the 107 level, marking its highest point in the last 10 months.

Adding to the market jitters, the CBOE Volatility Index, commonly known as the VIX and often regarded as the market’s fear gauge, has surged by a whopping 11% on the day. The VIX has now breached the 20 threshold, reaching its highest levels since late May 2023.

Cues From Tuesday’s Trading

The S&P 500 fell 1.3%, while the tech-heavy Nasdaq 100 tumbled 1.6%. Blue-chip stocks represented by the Dow Jones Industrial Average eased 1.1%, while small caps in the Russell 2000 Index slipped 1.4%.

US Index Performance On Tuesday

Tuesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 1.2% lower to $422.10.
• The SPDR Dow Jones Industrial Average ETF DIA fell 1% $330.57.
• The Invesco QQQ Trust QQQ fell 1.5% to $355.96, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• Both the Utilities Select Sector SPDR Fund XLU and the Materials Select Sector SPDR Fund XLB managed to stay flat for the day, outperforming all other sectors.
• The Consumer Discretionary Select Sector SPDR Fund XLY was the heaviest hit, down 1.8%.

Stocks In Focus:

• Airbnb Inc. ABNB fell 5% following a downgrade by KeyBanc due to concerns about a slowdown in the recovery of leisure travel.
• McCormick & Company, Inc. MKC fell over 9% on a disappointing earnings report.
• Cruise operator stocks are at the forefront of losses within the S&P 500 consumer discretionary sector. Carnival Corp CCL ‘s shares are plummeting by 6.6%, heading for their most significant single-day percentage decline since late June. Royal Caribbean Cruises RCL is down by 4.9%, while Norwegian Cruise Line Holdings is experiencing a 3.6% dip.
• Cancer drug developer Point Biopharma PNT surged by 84.7% to reach $12.35, marking its highest point in over two years. This remarkable increase follows the announcement of Eli Lilly and Co LLY ‘s agreement to acquire Point Biopharma in a cash-only deal valued at $1.4 billion.
• ALX Oncology Holdings Inc. ALXO shares jumped over 50% after the company said it would report ahead of the market open interim Phase 2 ASPEN-06 clinical trial results of evorpacept for the treatment of advanced HER2-positive gastric cancer.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 1.1%, with a barrel of WTI-grade crude trading at $88. The United States Oil Fund ETF USO was 0.9% higher to $80.  

Treasury yields rocketed, with the 10-year yield up by 9 basis points to 4.77% and the thirty-year yield up by 10 basis points to 4.91%. The iShares 20+ Year Treasury Bond ETF TLT was 1.6% lower for the day. 

The dollar edged up slightly, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.1% lower to 1.0466.

European equity indices had a negative session. The SPDR DJ Euro STOXX 50 ETF  FEZ fell 0.7%. 

Gold edged 0.1% down to $1,825/oz, while silver fell 0.8% to $21.19. Bitcoin BTC/USD was 0.3% lower to $27,422.

Staff writer Piero Cingari updated this report midday Thursday. 

Photo via Shutterstock.