By Yasin Ebrahim

Investing.com – The S&P 500 fell Tuesday, paced by a slump in Goldman Sachs that triggered a rout in financials after the investment bank’s quarterly results fell short of expectations.

It fell 1.6%. The slipped 1.4% or 485 point, while the Nasdaq lost 2.1%.

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%.

These earnings missed trigger further Wall Street bank selling. Morgan Stanley (NYSE:), that reports quarterly results Wednesday afternoon, fell more than 4 percent, and JPMorgan (NYSE 🙂 suffered losses of about 4% from the previous week.

The usual tailwind to banks was the rise in Treasury yields. However, market participants still believe that higher interest rates will eventually support the cyclical markets such as energy and financials.

“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.

The sector was led by Alphabet and Meta Platforms (NASDAQ) as the sell-off continued.

Microsoft (NASDAQ:) dropped 2% on the news that Activision Blizzard, a struggling videogame company (NASDAQ:), had been acquired for $69 billion. This acquisition saw Microsoft’s stock drop 25%.

”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 1% 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.

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.”