Wall Street clicked a six-day winning streak on Tuesday after a major bank warned that deeper market drops could be on the horizon.
Also, Walmart reported depressing fourth-quarter online sales — which pummeled the Dow part.
At the same time, the Treasury Department flooded debt markets, which pushed down bond prices and incremented yields to levels not seen since the dawn of the financial crisis.
The Dow Jones industrial average fell 254.63 points, or 1 percent, to 24,964.75, the first down day since its 1,000-point tumble on Feb. 8.
Other major indexes also fell, but the sell-offs weren’t as steep. The S&P 500 was down 0.6 %, to 2,716. The Nasdaq was about flat at 7,234.31.
The pullback came after Morgan Stanley warned that stocks could suffer if economic growth slows down and inflation keeps rising.
The arriving sell-off could be the “main course” after the “appetizer” earlier this month, when the Dow had its two largest-ever point drops in history to sink into a market correction, the bank said.
Investors expect the Federal Reserve will raise borrowing costs by 0.25 % during its meeting next month, and could hike its benchmark rate as often as four times this year, to tamp down the rising costs of goods.
Still, market watchers aren’t convinced that inflation is raising enough to confirm tightening the money supply so much.
“If inflation is heating up, it’s taking its sweet time,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in a Tuesday note.
Tuesday’s stock slide also arrived as yields on US government notes briefly hit their highest point since September 2008.
The 10-year note ended the day 1/10 of a % higher, at 2.89 %.
The Treasury auctioned off $179 billion in government debt on Tuesday — a larger-than-normal auction as the government ramps up financing after the Trump tax cuts.