Losses in technology and health care companies helped pull U.S. stocks lower Tuesday, snapping an eight-day winning streak by the Dow Jones industrial average.
The broad sell-off followed a slide in bond prices, which sent the 10-year Treasury yield to its highest level in almost seven years. That paves the way for higher borrowing costs on mortgages and other loans.
The prospect of higher mortgage interest rates weighed on homebuilders, while the rise in bond yields sent shares in high-dividend paying stocks lower.
“We’re of the view that we’re not in a high-rate environment, we’re in a less-low rate environment,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank. “So we’re not too concerned at these levels, but that’s definitely driving the market today.”
The S&P 500 index fell 18.68 points, or 0.7 percent, to 2,711.45. The Dow lost 193 points, or 0.8 percent, to 24,706.41. The drop pulled the 30-company average to a slight loss for the year.
The Nasdaq composite dropped 59.69 points, or 0.8 percent, to 7,351.63. The Russell 2000 index of smaller-company stocks finished flat at 1,600.34.
The market slide comes in the midst of a strong May for stocks. The Dow is on track for a gain of 2.2 percent, while the S&P 500 is closing in on a gain of 2.4 percent. The Nasdaq is up 4 percent.
On Tuesday, it was the bond market that appeared to hold investors’ focus.
The yield on the 10-year Treasury rose to 3.07 percent from 3 percent late Monday. That’s the highest level since July 2011 for the yield, which is used to set interest rates on mortgages and other kinds of loans.