Dow Dips 500 Points as Treasury Yields Spike and Gold Hits Record High

On Tuesday, Wall Street opened with a sharp downturn as stocks reversed their earlier gains amid fresh tariff worries, while Treasury yields rose and gold soared to a historic peak.

The Dow Jones Industrial Average fell by more than 500 points, or 1.1%, while the S&P 500 dipped 1.2%, indicating a rough start to Wall Street’s holiday-shortened trading week. The Nasdaq Composite experienced the most significant drop, decreasing nearly 1.4% at the outset and continuing the downward trajectory seen at the end of last week.

Cryptocurrencies also mirrored the stock market’s performance, with Bitcoin (BTC) struggling to maintain its position above $110k and Ethereum (ETH) giving back some gains despite an uptick in corporate treasury investments.

Treasury yields increase, gold hits new high

While U.S. stocks faced setbacks, Treasury yields advanced, and gold prices surged to a new all-time high. The 30-year U.S. Treasury yield reached 4.98%, while the benchmark 10-year yield increased to nearly 4.3%.

In a significant jump, gold prices skyrocketed to a record $3,508 per ounce, eclipsing its previous peak from April.

This rise in gold prices is fueled by market speculation around interest rates. Investors are recalibrating their expectations for a potential interest-rate cut by the Federal Reserve in September, following Fed Chair Jerome Powell’s hints during his speech at the Jackson Hole event in August.

Wall Street watches Fed and tariffs closely

This week is expected to provide insight into stock market sentiment after last week’s decline driven by alarming inflation data. With a shorter trading week ahead, the key focus will be on the August jobs report, set for release on Friday. Before that, investors will need to assess U.S. manufacturing data, job openings, and private payroll figures.

Market participants are also closely monitoring tariffs, as President Donald Trump’s trade policies encountered a setback when a federal appeals court ruled most of his reciprocal tariffs unconstitutional. This situation seems to be on a trajectory toward the Supreme Court, and market players are eager to follow its developments.

Moreover, U.S. Treasury Secretary Scott Bessent indicated that Trump has a “plan B” if the Supreme Court upholds the appeals court’s ruling.

In the meantime, Trump’s escalating conflict with the Fed is creating additional anxiety among investors. As Wall Street considers the implications of the Trump-Fed disagreements on the central bank’s independence, a notable early indicator could be the ruling regarding the “removal” of Fed governor Lisa Cook.