NEW YORK: Wall Street’s main indexes dived on Tuesday as 10-year Treasury yields held their multi-year highs, with investors continuing to grapple with the prospects of a prolonged restrictive monetary policy and its subsequent economic impact.

Adding to investor anxiety was the likelihood of a partial shutdown of the US government by Sunday, which, according to ratings agency Moody’s, is likely to be a “credit negative”.

“These prospects for another government shutdown combined with the auto strike feel as though all these are sort of combining together to do damage to the economy,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Megacap growth stocks including Apple, Microsoft, Meta Platforms and Alphabet lost between 0.9% and 2.7%.

Amazon.com extended its decline, last down 3.3%, after the US Federal Trade Commission slapped a long-awaited antitrust lawsuit against the online retailer. The tech-heavy Nasdaq was the worst performer among its peers.

All 11 S&P 500 sectors were trading lower, with utilities among the major laggards. As the sector is often seen as a bond proxy, it has been the worst performer so far this year with a near 12% decline.

Meanwhile, energy was the least hit, tracking crude prices above the $90-per-barrel mark. Although recent economic data have signaled core inflation crawling back to the Fed’s 2% target, rising energy prices remain a threat.

At 11:51 a.m. ET, the Dow Jones Industrial Average was down 330.43 points, or 0.97%, at 33,676.45, the S&P 500 was down 52.69 points, or 1.21%, at 4,284.75, and the Nasdaq Composite was down 167.55 points, or 1.26%, at 13,103.77.

All three major US stock indexes are set to log quarterly declines for the first time this year heading into the last trading days of September.

Pressuring equities, the benchmark 10-year Treasury yield has been defending its 16-year high since the Fed’s hawkish longer-term rate outlook, a stance also projected by other major central banks.

“There’s a lack of conviction or willingness for buyers to step up and support stock prices at these levels, even though there may be representative bargains out there,” Pavlik added.

Traders’ bets on the benchmark rate remaining unchanged in November and December stood at 74% and 59%, respectively, according to CME’s FedWatch tool. Meanwhile, a 25-basis-point rate cut is being priced in as early as March, growing to over 32% in June and July.

Through the week, data including on durable goods, the personal consumption expenditures price index for August, second-quarter gross domestic product, as well as remarks by Fed policymakers such as Chair Jerome Powell will be monitored.

Among individual stocks, Immunovant surged 93.5% after the drug developer said its antibody treatment succeeded in an early-stage trial. Roivant Sciences, the company’s largest shareholder as per LSEG data, was up 23.8%. Soleno Therapeutics more than quadrupled in value to $20 after its rare disorder drug diazoxide choline hit its trial goal.

Declining issues outnumbered advancers for a 3.75-to-1 ratio on the NYSE and a 1.59-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 34 new lows, while the Nasdaq recorded 19 new highs and 202 new lows.