Nasdaq Slumps as Treasury Yields Reach 19-Year High
US stocks opened lower on Tuesday due to rising oil prices and elevated Treasury yields. The yield on the 10-year Treasury reached its highest level since 2007, with investors awaiting the Federal Reserve's rate decision tomorrow.
The Fed is expected to hike rates by 25 basis points, which could lead to further increases before the end of the year. High yields on risk-free Treasuries are dampening the appeal of stocks and other risk assets.
Market participants are pricing in a 90% probability of a rate hike, with the Nasdaq under pressure due to concerns surrounding AI development. The tech-heavy index has been trading in a holding pattern over the past month, capped on the upside by 29,700 and on the downside by 28,900.
The USD is rising as the U.S. Treasury yield climbs, while EUR/USD falls amid a stronger dollar and weaker eurozone economic sentiment. Oil prices are also increasing due to the ongoing conflict in the Middle East, with Brent potentially rising towards $120 a barrel.