Stocks fall as US yields rise

Markets fell on Tuesday.

The S&P 500 tumbled 1.8 percent while the STOXX Europe 600 fell 1.0 percent.

Stocks fell as the US 10-year Treasury yield hit a 2-year high, hovering around 1.87 percent on Tuesday.

“The bond market is continuing to price in a more aggressive policy tightening by Federal Reserve based on still-high inflation and the Fed’s more hawkish guidance,” said Kathy Bostjancic, the chief US financial market economist at Oxford Economics.

Meanwhile, Ryan Detrick of LPL Financial said that “the economy is indeed slowing due to omicron”, but added that “we expect any near-term slowdown of output to simply be pushed back to further quarters once the omicron worries subside”.

Indeed, the latest COVID-19 surge is showing signs of slowing in a handful of areas in the US hit earliest by the omicron variant, with New York, for example, seeing its seven-day average of daily new cases falling since hitting a record earlier this month.

Still, the World Health Organization on Tuesday said the pandemic will not end as the Omicron variant subsides in some countries.

“This pandemic is nowhere near over and with the incredible growth of omicron globally, new variants are likely to emerge, which is why tracking and assessment remain critical,” said WHO Director-General Tedros Adhanom Ghebreysus.