By Yasin Ebrahim

Investing.com – The S&P 500 fell Tuesday, as the ongoing rout in tech continued as Treasury yields rallied, while a Goldman Sachs fuelled rout in financials exacerbated downside momentum. 

They fell 1.8% and slipped 1.5% (or 542 points), while the Nasdaq dropped 2.6%.

Tech stocks were not on the decline as Alphabet and Meta Platforms (NASDAQ) led the sell-off.

Microsoft (NASDAQS:) dropped more than 2 percent after it announced a $69 Billion purchase of Activision Blizzard, a struggling videogame company (NASDAQS:). This acquisition saw Microsoft’s stock drop by over 2%. Activision Blizzard was able to increase its share price by 26%.

”Acquiring Activision will help jump start Microsoft’s broader gaming endeavors and ultimately its move into the metaverse with gaming the first monetization piece of the metaverse in our opinion,” Wedbush said in a note.

Alibaba (NYSE:) slipped more than 2% as the White House is reportedly is looking into the Chinese tech firm’s cloud business practices, particularly the storage of data from U.S. clients, to establish if it poses a risk to U.S. national security.

Goldman Sachs, NYSE:), continued its wave of subpar quarterly results for major Wall Street banks. After missing the expectations in the bottom line due to revenue decline and expense rises, it continues to be underwhelming. Its shares dropped 7%.

Wall Street banks were able to sell more shares after this earnings disappointment. Morgan Stanley (NYSE :), which reported quarterly results on Wednesday was more than 5 percent lower, and JPMorgan (NYSE 🙂 increased losses by more that 4% from the week before.

Although a jump in Treasury yields was not a typical tailwind for banks it did stop the selling. Market participants believe higher interest rates will support cyclical market sectors such as financials and energies.

“We also see more opportunities in select cyclical and growth sectors, driven by the tailwinds from continued economic growth, a higher interest rate environment, stronger commodity prices, and our preference for higher-quality companies amid many uncertainties in 2022,” Wells Fargo said in a note.

Due to the rising oil price in America, Energy was the only sector ending the day with a positive result. It reached $85/barrel. 

Wall Street is red because of concerns about rising inflation, which could lead to the Federal Reserve raising interest rates and tightening its monetary policy quicker than they expected.

“We are seeing broad-based de-risking once again this morning, as traders and investors remain focused on inflationary pressures and potential Fed action just ahead,” Janney Montgomery Scott said in a note. “The Street has priced in up to 4 rate hikes this year, but concern is growing that something must be done sooner than anticipated.”