Stocks fall broadly along with bonds, gold

 

NEW YORK (AP) - Stocks fell broadly on Tuesday, led by sharp drops in utilities and phone companies. U.S. government bond prices also slumped, and gold had its worse day in nearly three years.

Investors are nervous about the timing and the pace of any increase in the super-low interest rates controlled by the Federal Reserve, and comments from central bank officials recently have added to their jitters.

Stocks rose from the open, but the gains quickly faded and the selling spread across industries. By the end of trading, ten of the 11 sectors of the Standard and Poor's 500 index were down. It was the second day of broad declines, a weak start to a new quarter after solid returns in recent months.

Bank stocks bucked the downward trend in the market and moved higher. Citigroup rose 1.5 percent. Higher interest rates will mean higher profits from lending for banks.

The Dow Jones industrial average fell 85.40 points, or 0.5 percent, to 18,168.45. The S&P 500 fell 10.71 points, or 0.5 percent, to 2,150.49. The Nasdaq composite fell 11.22 points, or 0.2 percent, to 5,289.66.

A big driver of the day's trading was rates, with investors closely watching the yield of the benchmark 10-year Treasury note, which has risen as the price of the note has dropped. The yield on Tuesday rose to 1.69 percent, up more than a tenth of a percentage point in less than a week.

The price of gold dropped sharply as investors anticipated that rates would keep rising. 

Higher rates diminish the appeal of gold, which investors tend to favor when they fear low rates will encourage inflation. Gold slumped $43, or 3.3 percent, to $1,269.70 an ounce.