S&P, Dow slump to lowest close since early June amid rate concerns; May-end for Nasdaq
Spencer Platt
U.S. stocks on Tuesday slumped, after economic data showed confidence in the economy falling to its lowest level since May amid a clear message from the Federal Reserve of higher rates for longer.
All sectors declined across the board, with sentiment further taking a hit from JPMorgan (JPM) top boss Jamie Dimon's warning of a possible 7% rate scenario.
The tech-heavy Nasdaq Composite (COMP.IND) retreated 1.57% to end at 13,063.61 points, its lowest close since May 31. Amazon (AMZN) slipped more than 4% after the Federal Trade Commission (FTC) and 17 U.S. states sued the retail and tech giant.
The benchmark S&P 500 (SP500) declined 1.47% to settle at 4,273.51 points, while the blue-chip Dow (DJI) slid 1.14% to close at 33,618.62 points. Both averages posted their lowest close since June 7 and June 6, respectively.
The 11 S&P sectors ended in a sea of red, with Utilities falling over 3% and Consumer Discretionary falling over 2%.
Treasury yields were little changed. The longer-end 10-year yield (US10Y) was up 1 basis point to 4.55%, while the more rate-sensitive 2-year yield (US2Y) was flat at 5.13%. 
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
The economic calendar on Tuesday showed the Conference Board's gauge of consumer confidence in September falling to 103, lower than the consensus figure of 105.8 and the 108.7 reading in August. 
Additionally, investors received data on the housing market. New home sales retreated 8.7% M/M in August amid historically high mortgage rates. Earlier, the S&P CoreLogic Case-Shiller home price index rose more than expected in July, and so did the FHFA house price index. 
Finally, the Richmond Fed manufacturing survey for September surprised to the upside. 
"Stocks (got) punished today against the backdrop of intensifying labor strikes and an upcoming funding deadline that may shut down the federal government," JosÃ© Torres, senior economist at Interactive Brokers (IBKR), said.
"Yields (took) a break from the selloff, however, as lighter-than-expected data on consumer confidence and new home sales brought in some dip buyers. Still, yields remain at 16- to 17-year highs, and the S&P 500 (SP500) has dropped below 4,300 for the first time since early June," Torres added.
Wall Street's major averages had managed to eke out marginal gains on Monday, rebounding from last week's hefty losses. However, concerns over protracted interest rates returned on Tuesday after JPMorgan's (JPM) Dimon said the world may not be prepared for the Fed's benchmark interest rate rising to 7%, adding that that could be the worst case with stagflation.
Dimon's comments came after the latest round of rate decisions from major central banks across the world led to a growing consensus that the global policy tightening cycle had come to an end. But concerns have been elevated at home after the Fed surprised market participants with an updated dot plot that was more hawkish than anticipated. It is worth noting that last October, Dimon had predicted a U.S. recession starting in the next six to nine months that failed to materialize.
"The markets continued its fallout from the Fed's higher rates for longer stance. Sectors that had the highest upside from a rate pivot continued their year long downtrend. Look at REITs, utilities, and banks, for example. Buyers in the 'Magnificent 7' are losing momentum. The FTC's lawsuit against Amazon (AMZN) is a negative catalyst," Chris Lau, investing group leader of DIY Value Investing, told Seeking Alpha.
Traders are also keeping a close eye on any updates in negotiations in Congress over the stopgap spending bill, as an October 1 deadline for the end of current funding for federal operations fast approaches.
"On Oct. 1, the government shutdown risk looms. This will feed the market that hungers any bad news to send indices lower for October," Lau added. 
More on the markets

Biggest stock movers today: Sirius XM, United Natural Foods, Immunovant and more
4 stocks to watch on Tuesday: Sirius XM, Costco and more
Commodity Roundup: Brent crude, gold dip; markets assess government shutdown impact
Energy Shock Could Pummel Equities And Bonds
Falling Victim To Bearish Bias