U.S. stocks were sharply lower Tuesday, led by technology stocks, as long-term Treasury yields remained near their highest levels in a dozen years or more, the dollar climbed for a fifth day to a ten month high, and consumer confidence slumped.

What’s happening

• The Dow Jones Industrial Average
  DJIA
  was down 408 points, or 1.2%, to 33,595.

• The S&P 500
  SPX
  was down 62 points, or 1.4%, to 4,276.

• The Nasdaq Composite
  COMP
  declined 193 points, or 1.5%, to 13,077.

Stocks on Monday snapped a four-day losing streak, with the Dow gaining around 43 points, or 0.1%, while the S&P 500 increased 0.4%, and the Nasdaq Composite rose 0.5%. Major benchmarks remain on the right track for September losses, with the S&P 500 extending a pullback from its 2023 high set at the tip of July.

What’s driving markets

The prospect of rates of interest staying higher well into next 12 months again pressured equity valuations, especially within the technology sector.

The benchmark 10-year Treasury yield rose a few basis points to close 4.57% early Tuesday, the very best since 2007, before pulling back, because the market continued to cost in hawkish rate of interest projections from the Federal Reserve.

See: ‘It’s pretty dire,’ John Hancock strategist says of sentiment on Wall Street as bond yields march higher

Many Fed officials in recent days have reiterated they consider the central bank might want to increase rates again and keep them at elevated levels for a while to quell inflation.

Jamie Dimon, CEO of JPMorgan Chase warned the market will not be ready for rates of interest that might go to 7% if inflationary pressures are usually not sufficiently contained.

Worries that higher rates of interest are starting to affect the U.S. consumer are contributing to market weakness, said David Rosenberg, president of Toronto-based Rosenberg Research, in a Tuesday note.

And the stock market faces other “more durable shocks coming from the breakout within the U.S. dollar, a margin-squeeze from the newest spike in oil prices, and the relentless run-up in market rates of interest,” he wrote. “Plus, we’re in a shift from fiscal stimulus towards restraint, especially in the case of how this affects the buyer sector.”

Higher Treasury yields relative to their international peers have lifted the U.S. dollar, with the dollar index
DXY
moving above 106, to its highest in about 10 months. A surging dollar may act as a headwind for U.S. equities, partly by making multinationals less competitive.

In U.S. economic news, the Conference Board’s closely followed consumer-confidence index fell to a four-month low of 103.0 in September, reflecting angst about rising rates of interest, still-high inflation and a budget stalemate in Washington, in addition to consternation about high gasoline prices.

The S&P CoreLogic Case-Shiller 20-city house price index rose 0.9% in July, as compared with the previous month. Prices were up for the sixth month in a row. On a year-over-year basis, home prices within the 20 major metro markets within the U.S. were up 0.1%. A broader measure of home prices, the national index, rose on a month-over-month basis in July by 0.6%, but rose 1% over the past 12 months. All numbers are seasonally adjusted.

Individually, the Commerce Department said U.S. new-home sales fell 8.7% to an annual rate of 675,000 in August, from a revised 739,000 within the prior month.

Also, not helping the mood was nervousness across Asian bourses amid increased worries about China’s property sector. Shares in China Evergrande HK:3333 plunged afresh after the heavily indebted developer missed a debt payment and former executives were detained by the authorities. Hong Kong’s Hang Seng Index fell 1.4% to its lowest since November.

Corporations in focus

• Amazon
  AMZN,
  -4.14%
  dropped 3.7% after the U.S. Federal Trade Commission and 17 state attorneys general sued the e-commerce giant on Tuesday, on anti-trust grounds.

• Tesla Inc.
  TSLA,
  -1.15%
  has likely benefited from China subsidies, a European Union investigation reportedly found, which may lead to fines for the electric-vehicle maker or other measures to level the playing field. Shares fell 1.2%.

• Rivian Automotive Inc.
  RIVN,
  +5.16%
  rose 5.7% after being designated Tuesday as a bullish “fresh pick” by Baird analyst Ben Kallo ahead of the electric-vehicle maker’s deliveries report due out next week.

• Fisker Inc.’s stock 
  FSR,
  +9.44%
  jumped 11.8%, after the EV maker said it expects to achieve its goal of deliveries of 300 vehicles a day later this 12 months.

• Thor Industries Inc.‘s
  THO,
  -2.69%
  shares fell 2.% after the RV maker forecasted full-year profit and sales that missed expectations, and said it expected subdued consumer demand to proceed within the months ahead.

• United Natural Foods Inc.’s stock
  UNFI,
  -27.62%
  tumbled 26.8%, after the grocery wholesaler swung to a fiscal fourth-quarter loss and posted sales that lagged estimates.

— Jamie Chisholm contributed.