• The Dow Jones index recorded the largest daily loss in two weeks
• Collective decline of the S&P 500 index sectors
• The two-year US Treasury yield exceeds 5% for the first time in 16 years
• The dollar index rises to its highest level in more than two months
US indices closed sharply lower on Tuesday following Jerome Powell testified before the US Congress that the Federal Reserve will likely need to raise interest rates more than expected to curb soaring inflation.
Powell also stated that the Fed would not consider changing its 2% inflation target and that the labor market does not indicate an approaching deflation.
Following the remarks, investors dramatically raised their bets on a 50 basis point rate hike in March, with money market futures pricing in more than a 65% chance of such a move, up from 31% prior to the comments.
Two-year Treasury yield:
The two-year US Treasury bond yield, which is considered the most sensitive indicator of US indices at the present time, jumped to more than 5% for the first time in regarding 16 years.
These rises came in conjunction with the rise of the dollar index to its highest level in more than two months, following the hawkish statements made by the Federal Reserve Chairman regarding the path of raising interest rates.
S&P 500 and Dow Jones:
The S&P 500 declined by 1.5% to 3,986 points, amid a collective decline for all sectors of the index.
The Dow Jones index fell by 1.7%, equivalent to regarding 570 points, recording its highest daily loss in two weeks, to close below 33,000 points.
Nasdaq Composite Index:
The Nasdaq Composite Index fell by 1.25%, recording its worst session since the beginning of March, to close at 11,530 points.
Excluding the education sector, all other major sectors declined on Tuesday, including the technology and energy sectors, which fell by 1.2% and 1.1%, respectively.
