Wall Street Falls as Megacaps Struggle with Rising Treasury Yields Ahead of Key Inflation Reports

On Tuesday, Wall Street’s main indexes fell, with megacaps under pressure from rising Treasury yields and traders scaling back expectations for an early start to interest-rate cuts ahead of key inflation reports due later this week.

Megacap stocks such as Microsoft, Apple, Tesla, and Amazon.com shed between 0.8% and 2%, with yields on shorter- and longer-dated U.S. Treasury notes ticking over 4%.

Real estate and materials stocks were the worst hit among the major S&P 500 sectors. The weakness follows a strong session for Wall Street on Monday, during which the tech-heavy Nasdaq jumped over 2% to log its best day since November.

However, Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest, expects these firms to underperform this year. Data on consumer and producer inflation, expected on Thursday and Friday, respectively, will be crucial for clues on the Federal Reserve’s monetary policy trajectory.