Overnight, all three major US stock indexes fell more than 1%, with large-cap tech stocks across the board. The rise in US bond yields and the strengthening of the US dollar continued to put pressure on the market, and the latest housing sales and consumer confidence data raised concerns among investors about the US economic situation.
Large-cap tech stocks have been the main driving force behind the rise of the US stock market in the first half of this year, but this support has been wavering since September.
The S&amp;P 500 Information Technology Index, which is more concentrated in large-cap tech stocks, has fallen more than 10% from its high in July. The index has also fallen 1% for the third time in the past five trading days.
Throughout most of this year, the hawkish stance of the Federal Reserve did not pose a problem for the stock market. However, as officials continue to suggest that interest rates may need to remain at higher levels for longer than investors expect, market sentiment is deteriorating.
People are worried that the Fed's enthusiasm for curbing inflation may undermine the economy, and with consumers becoming more cautious, the market may experience a reversal along with the collapse of large-cap tech stocks.
Quincy Krosby, Chief Global Strategist at LPL Financial, the largest independent brokerage firm in the United States, said:
&#34;The concerns about rising yields have not dissipated, but have become even more serious. Although tech stocks may be able to hold on, you are starting to see cracks.&#34;
&#34;A very important factor in the market - US consumers - is becoming increasingly concerned, which is not what the market wants to see.&#34;
The expectation of high interest rates for a long time has shattered consumer confidence
On Tuesday, the S&amp;P 500 Information Technology Index fell 1.8%, expanding its decline from the July high to 11%, while the 10-year US Treasury yield hovered near its highest level since 2007. The S&amp;P 500 index fell 1.5%.
Neel Kashkari, President of the Minneapolis Fed, said that if the economy is stronger than expected, he supports another rate hike this year, which has dampened market sentiment.
Earlier, Jamie Dimon, CEO of JPMorgan Chase, warned that the worst-case scenario is still possible, with the benchmark interest rate of the Federal Reserve reaching 7% and stagflation occurring.
Consumers, who were once enthusiastic, have now realized this, as evidenced by the sharp decline in the Conference Board Consumer Confidence Index. At the same time, the index reflecting consumers' expectations for the next six months fell to 73.7, below the level of 80. Historically, 80 is a sign of an economic recession in the next year.
Investors doubt whether tech stocks can recover their upward momentum
Although the global nature of tech companies to some extent insulates them from domestic growth challenges, they are not completely immune.
Matt Maley, Chief Market Strategist at renowned investment firm Miller Tabak, said that as concerns about long-term high interest rates intensify, selling off large-cap growth stocks that have performed well for most of this year is increasingly becoming a source of funds for investors.
Maley also stated:
&#34;Now investors are finally realizing that interest rates will indeed remain high for a longer period of time, and they are quickly becoming concerned about the valuation levels of these large tech stocks.&#34;
Despite a 10% decline since July, the S&amp;P 500 Information Technology Index has still risen 32% year-to-date, compared to an 11% increase in the S&amp;P 500 Index during the same period.
However, investors are skeptical about whether large tech stocks can quickly recover the momentum of the first half of the year.
Citigroup strategists have stated that the net short position in the tech-heavy Nasdaq 100 Index is currently $8.1 billion, with all long positions already closed.
Some analysts believe that this is partly due to profit-taking and partly due to market anxiety, as the tone of higher long-term interest rates has indeed taken root.

People are concerned that with the collapse of large tech stocks, the market may experience a reversal.

US stock market loses its biggest momentum! Under the pressure of interest rates, technology stocks have already pulled back by 10%.