Debt Limit, Inflation Hammer Wall Street

Wall Street stocks ended sharply lower on Tuesday after a broad sell-off driven by rising US Treasury yields, deepening concerns over persistent inflation, and contentious debt ceiling negotiations in Washington.

US Treasury yields continued rising, to the highest level since June, as inflation expectations heated up. Fears also grew that the US Federal Reserve could shorten its timeline for tightening its monetary policy.

Treasury Secretary Janet Yellen said she expected inflation to end 2021 near four percent. Meanwhile, she warned lawmakers their failure to avert a government shutdown as the nation moves closer to exhausting its borrowing capabilities could cause "serious harm" to the economy.

All three major stock indexes slid nearly two percent or more, with interest rate sensitive tech and tech-adjacent stocks weighing heaviest as investors lost their risk appetite.

The Dow Jones Industrial Average fell 1.63 percent to 34,300, the S&P 500 lost just over two percent to end at 4,353 and the Nasdaq Composite dropped 2.83 percent to 14,547.

The S&P 500 index and the Nasdaq Composite index are on track for their largest monthly declines since September 2020.

Among the eleven major sectors of the S&P 500, all but energy ended red, with tech and communications services suffering the steepest percentage losses.

Apple, Microsoft, Amazon.com and Alphabet weighed heaviest on the S&P and Nasdaq.

Ford Motor was one of the few bright spots, advancing on news that it would join Korean battery partner SK Innovation to invest US$11.4 billion to build an electric F-150 assembly plant and three US battery plants. (Reuters)