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U.S. stocks markets tumbled Tuesday as investors fled from high-flying tech stocks, dragged down as Treasury yields hit their highest levels since June.

© Seth Wenig/AP Stocks moved lower Tuesday on Wall Street, led by declines from Big Tech companies.

The Dow Jones industrial average dropped more than 547 points or 1.6 percent during the afternoon session. The S&P 500 tumbled 89 points or 1.9 percent, while the tech heavy-Nasdaq lost 377 points or more than 2.5 percent, setting the index on course for its third consecutive day of losses.

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Wall Street received its clearest signal yet that the Federal Reserve would ease off its aggressive monetary policy, as central bankers indicated last week they will pull back on supports for markets in November if the economy progresses as expected. Since then, Treasury yields have pushed higher, compelling some investors to seek out alternatives to stocks.

Yellen tells Congress that U.S. will run out of debt ceiling flexibility on Oct. 18

The yield on the 10-year U.S. Treasury note climbed to 1.529 percent Tuesday morning, notching its sixth straight day of increases and closing in on three-month highs. Yields rise as bond prices fall

“The gyrations felt across markets today are another sign that investors have become too comfortable with the levels of monetary stimulus the Fed has injected over the last 18 months,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Since the Fed signaled they would begin paring back stimulus in the near future, treasury yields have been on the rise and growth stocks are taking the biggest hit as valuations in a higher rate regime look less attractive, especially in the technology sector.”

Some of the biggest names in tech — which have driven the record-shattering growth on Wall Street since the pandemic began — sank during the afternoon trading session. Microsoft, Facebook, Amazon and Google’s parent company, Alphabet, fell by more than 3 percent, while Apple slipped by 2.3 percent.

Amazon’s founder Jeff Bezos also owns The Washington Post.

While information technology and communication services suffered the heaviest losses, every sector except energy was in the red.

The gradual shift away from an expansive monetary policy and the political contest over President Biden’s economic agenda have rattled markets in recent weeks.

Fed signals easing of market supports could start in November, despite ongoing threat of delta variant

Investors are also grappling with a tense and potentially catastrophic struggle over the debt-ceiling in Washington. On Tuesday, Treasury Secretary Janet Yellen warned lawmakers that the U.S. will run out of flexibility to avoid breaching the debt limit on Oct. 18. Her letter to Congress arrived less than a day after Senate Republicans blocked a bill that would suspend the debt ceiling and prevent a government shutdown on Friday.

The debate over the debt ceiling on Capitol Hill can lead to a reluctance to purchase bonds, said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. As bond prices move lower — through a decrease in the number of people willing to buy them — bond yields move higher, since bond yields move in the opposite direction of prices.

How investors perceive the ongoing threat of the delta variant is another factor affecting the stock market. As the highly contagious coronavirus variant prompted concerns that the economic recovery would falter, interest rates fell. But economists and Fed officials have maintained optimism even as a surge in cases has weighed on consumer spending and sapped some workers’ confidence about new job openings.

A panel of business economists tempered its expectations for economic growth this year, citing the ongoing threat of the coronavirus, but it projects that more robust growth will arrive by the end of the year and continue into 2022.

Panelists from the National Association for Business Economics boosted their outlook for U.S. economic growth for 2022 in a survey released on Monday, forecasting that U.S. GDP would grow by 3.5 percent, up from 2.8 percent from a previous survey in May.

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