US close: Stocks sharply lower amid rising bond yields, bank earnings

dl nyse new york stock exchange wall st street city finance dow jones nasdaq sp finance dollar dollars us usa united states of america 2 — New York Stock ExchangeSharecast photo / Josh White

Wall Street stocks closed sharply lower on Tuesday as market participants digested more corporate earnings and kept one eye on government bond yields that were now at pandemic-era highs.

At the close, the Dow Jones Industrial Average was down 1.51% at 35,368.47, while the S&P 500 was 1.84% weaker at 4,577.11 and the Nasdaq Composite saw out the session 2.60% softer at 14,506.90.

The Dow opened 543.34 points lower on Tuesday, extending losses recorded on Friday before major indices took a one-day break for the Dr Martin Luther King Jr holiday yesterday.

Bond yields were firmly in focus, with the yield on the benchmark 10-year Treasury note hitting 1.875% on Tuesday, the highest level seen since January 2020, while the 2-year yield broke above 1% for the first time since February 2020.

The Covid-19 Omicron variant was also in focus, with questions now being raised regarding the state of the global economic recovery, with a number of countries and regions reinstating lockdowns and other social distancing measures as part of an effort to curb the spread of the variant.

In the corporate space, investment bank Bank of New York Mellon beat quarterly earnings estimates on Tuesday after assets under management increased during the period thanks to higher market values and net inflows, while Goldman Sachs posted quarterly earnings per share of $10.81, down from $12.08 in the fourth quarter of 2020 and missing expectations of $11.76.

Elsewhere in company headlines, Microsoft agreed to buy video game company Activision Blizzard in a $68.7bn deal. Under the terms of the deal, Microsoft will pay $95.00 per share in cash for the Call of Duty and World of Warcraft publisher. When the transaction closes, Microsoft will become the world's third-largest gaming company by revenue, behind Tencent and Sony.

On the macro front, the New York Empire State Manufacturing Index turned negative for the first time in a year as the Covid-19 omicron strain weighed on the index, tumbling to -0.7 in January following December's print of 31.9.

Finally, the National Association of Housebuilders' Housing Market Index came in at 83,000 in January, down from the previous month's reading of 84,000.

"The solid market for home building continued in November despite ongoing supply-side challenges," said NAHB Chairman Chuck Fowke. "Lack of resale inventory combined with strong consumer demand continues to boost single-family home building."

Dow Jones - Risers

Nike Inc. (NKE) $148.18 0.00%
American Express Co. (AXP) $168.40 0.00%
Merck & Co. Inc. (MRK) $81.36 0.00%
McDonald's Corp. (MCD) $257.71 0.00%
Verizon Communications Inc. (VZ) $53.28 0.00%
Johnson & Johnson (JNJ) $167.84 0.00%
Salesforce.Com Inc. (CRM) $231.23 0.00%
Walmart Inc. (WMT) $145.06 0.00%
Procter & Gamble Co. (PG) $159.80 0.00%
Coca-Cola Co. (KO) $61.39 0.00%