The U.S. stock market experienced a significant downturn on Tuesday, as equities once again plunged into a downward spiral. The Dow Jones Industrial Average (DJIA) recorded its most substantial daily drop since the March banking crisis. According to preliminary data from FactSet, the Dow tumbled by about 388 points, or 1.1%, closing near 33,618. This marks the largest percentage decline for the Dow since March 22, as reported by Dow Jones Market Data. Notably, the index also closed below its 200-day moving average, a crucial signal for investors as it signifies a break in its upward trend. The last time the Dow breached this support level was on May 25.
Equally concerning were the losses experienced by other major indices. The S&P 500 index (SPX) declined by 1.5%, while the Nasdaq Composite Index (COMP) shed 1.6% of its value. Throughout September, stocks have faced mounting pressure and an increasing level of volatility, particularly following last week's surprise announcement from the Federal Reserve. The central bank indicated that its policy rate could remain above 5% until the end of next year, catching investors off guard who had anticipated rate cuts.
This heightened anxiety is further reflected in the surge of the 10-year Treasury yield (TMUBMUSD10Y), which currently stands at 4.558%, marking its highest level since October 2007. Consequently, funding costs in the U.S. economy have surged in response to this upward trend in yields.
The stock market is undoubtedly facing a challenging period, with investors closely monitoring developments both domestically and globally as they try to navigate these uncertain times.