NEW YORK (Reuters) - U.S. stocks slid on Tuesday as 10-year Treasury yields hit the highly anticipated 3 percent mark for the first time in four years, stoking concerns over higher borrowing rates for companies already facing rising costs, and as quarterly results failed to deliver positive outlooks.
The S&P 500 and the Dow fell the most in two-and-a-half weeks, while the Dow Jones Industrial Average was down for a fifth day in a row. The S&P 500 is now down 1.5 percent year-to-date.
The 10-year yield, a benchmark for global borrowing costs, has been driven steadily higher by a combination of concerns over inflation, growing debt supply and rising Federal Reserve borrowing costs.
“It makes borrowing costs more expensive for corporations. This market rally for the last nine years has been driven by low interest rates, accommodating monetary policy and excess liquidity,” said Oliver Pursche, chief market strategist for Bruderman Asset Management in New York.
Higher bond yields could also prompt portfolio managers to weigh moving money into more attractive fixed-income securities at the expense of equities. The stock market had already been spooked by a climb in bond yields earlier in the year, sliding sharply in February..
Technology .SPLRCT and industrial .SPLRCI stocks weighed on the major indexes on Tuesday, with Alphabet Inc (GOOGL.O), Facebook Inc (FB.O), 3M Co (MMM.N) and Caterpillar Inc (CAT.N) all falling more than 3.5 percent.
Alphabet shares fell {GOOGL.O;-PCTCHNG:2}77 percent, erasing the stock’s year-to-date gains as rising expenses and shrinking margins overshadowed the company’s better-than-expected profit.
Industrial bellwether Caterpillar tumbled {CAT;-PCTCHNG:2} percent on fears of increasing steel prices, despite the company’s beating earnings estimates due to strong global demand.
Diversified industrial manufacturer 3M was the biggest drag
