NEW YORK — U.S. stocks fell sharply Wednesday afternoon, compounding losses that have wiped roughly $1.6 trillion from equity values since the start of the week, according to exchange data reviewed by SourceRated.
The S&P 500 shed 1.7 percent to 4,415 in midday trading, while the Dow Jones Industrial Average tumbled more than 520 points, or 1.5 percent. The tech-heavy Nasdaq Composite fared worse, sliding 2.2 percent and pushing the benchmark more than 10 percent below its July peak — the common definition of a correction.
Analysts pinned the retreat on a fresh spike in bond yields after government figures Tuesday showed core consumer prices rising faster than expected. The yield on the 10-year Treasury note breached 4.30 percent for the first time since November, eroding the relative appeal of riskier assets. “Equities are finally waking up to the idea that rates could stay higher for longer,” said a credit strategist at a global bank who was not authorized to speak publicly.
Volatility also picked up. The CBOE VIX index, Wall Street’s so-called fear gauge, touched 22 — nearly double its three-month average. Option desks cited brisk demand for short-dated put protection tied to megacap technology names, a sign, they said, that retail investors were “selling first and asking questions later.”
Beyond interest-rate worries, several traders pointed to anxiety over a potential U.S. government shutdown next month and ongoing labor strikes in the auto sector as additional headwinds. “Macro uncertainty is stacking up at the worst possible time for corporate earnings,” said Maria Chen, head of U.S. equities at Horizon Asset Management.
Still, some money managers urged caution against reading too much into the downdraft. “We have not seen the forced deleveraging typical of a bear market,” noted Daniel Ortiz, portfolio strategist at FirstRock Capital. He expects institutional buyers to re-enter once the S&P 500 approaches its 200-day moving average near 4,200.
Investors will get another data point Thursday when the Labor Department releases weekly jobless claims. A soft reading could rekindle hopes the Federal Reserve will pause rate hikes at its next meeting on Nov. 1, providing a potential floor for equities.
Until then, strategists warn turbulence is likely to remain elevated. “As long as yields grind higher, rallies will be fleeting,” a New York-based equities trader said. “The path of least resistance — at least for now — is down.”