Stocks plummet on Fed Chair Powell’s testimony, hawkish tone

Yahoo Finance anchor Seana Smith looks at how the markets are reacting Tuesday afternoon to Fed chair Jerome Powell's testimony to Congress.

Video transcript

SEANA SMITH: But first, let's begin with the selling action that we are certainly seeing in the equity market today. You're looking at the Dow off 573 points, a drop here coming following a hawkish tone from Powell. Powell was testifying before lawmakers earlier today, reiterating the fact that we could see higher rates. And the higher for longer environment is putting pressure across the board here with equities and NASDAQ off just around over 1%, the S&P back below 4,000, a critical level there for the S&P. You can see it off just about 1 and 1/2%.

Pulling up the intraday chart, you can certainly see all three, actually, of the major averages right around the lows of the day, as we head into the final hour of trading. Let's take a look also at the bond market action. The 10-year yield pushing to the downside here, but the five-year yield actually pushing to the upside, some gains there. The 13-week, though, is what I want to focus on. Obviously, a pop here following those comments from Jay Powell. The two-year yield hitting 5%. That's the highest level that we've seen since 2007.

Let's also take a look at the VIX here, the VIX popping on some of the uncertainty out there, exactly what the next couple of months could potentially look like here for the markets in the face of those higher rates. You're looking at that VIX just below 20. Let's take a look at the sector action. All 11 of the S&P sectors in the red all off over 1%. Right now, the worst performers, financials. The XLF off just around 2 and 1/2%. Real estate materials not too far behind. Digging deeper into some of the selling that we are seeing, you can certainly see Merck the only stock in the Dow right now holding on to gains. The worst performers, though, JPMorgan, off just around 3%, and Goldman Sachs also off about 3%.

Now, financials typically do better in that higher rate environment, but some worries about a recession certainly weighing on some of those big names. And it's not only the larger bank names. Certainly, we are seeing pressure across the board when it comes to some of those regional plays as well. Inside the NASDAQ, a lot of red as the larger cap tech names under pressure, names like Tesla off just around 2%. You're looking at Google off about 1 and 1/2% today. So lots of red on that screen, matching my dress.