US Stock Market Today: Dow Jones Falls 571 Points, NASDAQ Tumbles 1.7% Amid Fiscal Concerns

On Tuesday, US stocks failed to regain ground, and stock markets worldwide experienced heavy losses as fears of the overvalued tech sector and financial policy insecurities increased. The S&P 500 and NASDAQ 100 decreased by almost 1%, and the Dow Jones Industrial Average dropped by 300 points.

Rising Treasury Yields Pressure Markets

One of the factors that led to the decline in the stocks was the significant increase in the US Treasury yields. On Tuesday, the 30-year Treasury yield momentarily reached 5.00% and this is because of the fear of the US fiscal policy and how the same affects the overall economy. 

The rising yield of bond markets is an indication of concerns about a growing fiscal deficit and a growing government debt, especially after the recent ruling by a court that had ruled former President Trump's tariffs illegal. This has raised the issue of whether the US government would be compelled to pay back tariffs, which would further strain the fiscal deficit.

Investors responded swiftly to the turbulence in the bond market, causing a sudden sell-off in technology stocks. NVIDIA, a leading company in the semiconductor market, fell 3 percent, and Advanced Micro Devices (AMD) fell 3.5%. 

The two companies have been leading in the AI boom, but investors are becoming increasingly skeptical about the sustainability of AI-driven growth. This doubt has caused a reassessment of large stakes in both hardware and software companies with heavy investments in artificial intelligence.

Impact on Global Markets and Tech Sector

Among the most affected were tech stocks, which have contributed a large portion of the market gains this year. The decrease of 2% is after a decline of 3.8% last week, as the company revised its revenue projection as low as compared to those in the market. The fall of tech stocks is indicative of a market-wide overreaction to the pricing of high-growth stocks in the face of tightening monetary policy.

Europe was no different; Stoxx Europe 600 and the German DAX were some of the key indices that began to decrease in Europe. Bond yields in Europe were at their highest in the past several years, and the UK experienced the highest bond yields since 1998. 

Other countries that registered their best yields since 2011 were Germany, France, and the Netherlands. These increasing yields in key economies of the world are putting strain on an already tense fiscal position, and economic stability is questioned.

Skepticism Over Future Growth and Fiscal Policy

Investors are keenly monitoring the US fiscal policy, mainly due to the uncertainty surrounding the tariffs and the possibility that they may lead the US government to a riskier fiscal stance. The sudden fluctuations of the bond market imply that traders are preparing to face even more volatility, particularly given that the Federal Reserve is suggesting that interest rates may be lowered. 

Meanwhile, the tech industry is still under review as investors evaluate whether the sector can maintain the high valuations in the face of a more constrained economic environment. September is experiencing mounting pressure in the market due to the bond market and continued uncertainty over fiscal policy. Traders are still wary until they get better signals before they can buy new positions.

Also Read: US Stock Market Today: Appeals Court Rules Against Trump Tariffs, Market Faces Mixed Outlook