Spike in bond yields spooks investors, deflates tech stocks

Technology companies led a broad slide in stocks on Wall Street Tuesday, deepening the market’s September swoon.

The S&P 500 fell 2 percent, its worst drop since May. The tech-heavy Nasdaq dropped 2.8 percent, its biggest drop since March. Decliners outnumbered advancers on the

New York Stock Exchange 4 to 1.

The benchmark S&P 500 is down 3.8 percent so far this month and on pace for its first monthly loss since January. The September slump has been an exception to a mostly steady stream of gains so far this year that has brought the S&P 500 up 15.9 percent since the beginning of 2021.

The selling came as a swift rise in Treasury yields forces investors to reassess whether prices have run too high for stocks, particularly the most popular ones. The yield on the 10year Treasury note, a benchmark for many kinds of loans including mortgages, jumped to 1.54 percent. That’s its highest level since late June and up from 1.32 percent a week ago.

Bond yields started rising last week after the Federal Reserve sent the clearest signals yet that the central bank is moving closer to begin withdrawing the unprecedented support it has provided for the economy throughout the pandemic. The Fed indicated it may start raising its benchmark interest rate sometime next year and will likely begin cutting back the pace of its monthly bond purchases before the end of this year.