By Stephen Culp and Tharuniyaa Lakshmi
NEW YORK, Sept 15 (Reuters) - Wall Street extended its slide on Tuesday, as rising U.S. Treasury yields, mounting debt concerns and soaring crude prices kept buyers on the sidelines.
All three major U.S. stock indexes were lower in a broad selloff that weighed on nearly every sector but energy. That sector benefited from expanding hostilities in the Middle East, which included new attacks on Saudi Arabia's energy infrastructure.
"It is kind of a quiet market, but
then you look at the advance/decline line, at the number of stocks that are moving in one direction, it is demonstratively to the downside over the last probably two weeks," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois.
The Federal Reserve has convened for its two-day monetary policy meeting, which is due to culminate on Wednesday with the central bank's rate decision. With recent economic data showing the labor market on solid footing, while war-related energy price pressures are morphing into broader, systemic inflation, the central bank is expected to implement a 25-basis-point increase to its Fed funds target rate — its first interest rate hike in over three years.
In the wake of last week's hot inflation data and the near 25% jump in U.S. crude prices over the last two weeks, financial markets have priced in a near-certain 92.3% likelihood of a rate hike on Wednesday, up from 33.1% one month ago, according to CME's FedWatch tool.
"This will probably be not a one-and-done, but a series of rate increases," Nolte said. "It will be dependent on oil; that is really the source of inflation and it's starting to seep into other parts of the market."
As rate-hike bets increase, global bond yields resumed their upward climb, with benchmark U.S. Treasury yields breaching the 5% mark for the first time since 2007.
Rising interest rates are increasing the pressure on heavily indebted borrowers, including companies that have placed big bets on AI.
Those worries exacerbated mounting fears over AI's destructive potential and growing opposition to the construction of data centers, which came to a head on Monday and dragged the Philadelphia SE Semiconductor index 5.9% lower.
The semiconductor index, which has helped drive broader stock market gains this year, failed to meaningfully recover from Monday's rout, eking out a 0.3% gain.
The Dow Jones Industrial Average fell 429.96 points, or 0.82%, to 51,991.24, the S&P 500 lost 36.03 points, or 0.47%, to 7,583.95 and the Nasdaq Composite lost 204.17 points, or 0.78%, to 25,982.25.
Among the 11 major sectors of the S&P 500, consumer discretionary stocks were the biggest percentage losers, while energy, buoyed by rising crude, advanced 2.3%.
Dave & Buster's tumbled 19.6% following the company's second-quarter revenue miss.
Waystar rose 7.3% after Reuters reported the healthcare software firm is exploring options, including a potential sale.
Weakness in bitcoin weighed down crypto firms Coinbase and Strategy 6.9% and 3.5%, respectively.
Declining issues outnumbered advancers by a 2.47-to-1 ratio on the NYSE. There were 97 new highs and 539 new lows on the NYSE.
On the Nasdaq, 1,413 stocks rose and 3,281 fell as declining issues outnumbered advancers by a 2.32-to-1 ratio.
The S&P 500 posted 12 new 52-week highs and 15 new lows while the Nasdaq Composite recorded 40 new highs and 239 new lows.
(Reporting by Stephen Culp; Additional reporting by Niket Nishant and Tharuniyaa Lakshmi in Bengaluru; Editing by Rod Nickel)
