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Dow drops as markets brace for Fed’s rate hike decision

Yahoo Finance Live anchor Seana Smith checks on market indices' trends ahead of the Fed's interest rate hike, while also looking at the bond market, the U.S. dollar, and sector losses.

Video Transcript


SEANA SMITH: Welcome to Yahoo Finance on this Tuesday afternoon. I'm Seana Smith, along with Dave Briggs and Rachelle Akuffo. Let's get you up to speed on today's market action. Once again, we are looking at red across the board. Dow, S&P, and NASDAQ all in negative territory.

You can see the Dow off just around 407 points, so just off the lows of the day right around 2:00 PM Eastern time. And NASDAQ moving to the downside, off just over 1%, as well as the S&P. Take a look at where the S&P is trading right now, and it's just around 10% below that August 16 high that we hit just around a month ago. So the S&P now trading off just about 1.3% today.

The big news, though, is what's going on in the bond markets. Let's take a look at the 10-year yield here. The 10-year note moving to the upside at 3.57 here. A lot of focus, though, on what we're seeing in the 2-year. The 2-year yield rising just short of 4%.

And I want to take a look at the spread here between the 10 and the 2 because firmly in negative territory. And we know that that spread, obviously, an indicator here of a potential recession. So an important just chart here to keep in mind the spread between the 10 and the 2. When you take a look at that 2-year yield, though, marching towards 4%, the highest level that we have seen in quite some time, since 2007.

I just want to point to the strong US dollar. Once again, today, on an intraday basis, you can see the march to the upside here, up just around one half of a percent above 110, so something to keep in mind here as we await tomorrow's decision from the Fed. Taking a look at the sector action on an intraday basis, red across the board, all 11 of the S&P sectors moving to the downside. Biggest losses today coming from materials and real estate.