Surging Yields Crush Stocks

Updated from 4:13 p.m. EDT

Stocks in New York sold off for the third time in as many sessions and closed sharply lower Thursday as bond yields skyrocketed.

The Dow Jones Industrial Average was down 198.94 points, or 1.5%, at 13,266.73. The S&P 500 was off 26.66 points, or 1.8%, at 1490.72, and the Nasdaq Composite was lower by 45.80 points, or 1.8%, at 2541.38.

Every one of the 30 Dow components were negative. The worst performers included Wal-Mart (WMT Quote), Microsoft (MSFT Quote), 3M (MMM Quote) and AT&T (T Quote).

More broadly, homebuilders and utilities were some of the hardest hit sectors.

The last three days have been rough for the stock market. During Tuesday and Wednesday, the industrials lost more than 200 points, including a drop of 129.79 last time out. The S&P shed about 22 points, and the Nasdaq fell 31 points.

Weighing on the mood of late has been a decrease in bond prices and the corresponding ascent in yields. Around 4 p.m. EDT, the 10-year Treasury note was sinking 1 5/32 in price, yielding 5.12%, the first time it has been above 5% since last August.

The 30-year bond was diving 2 1/32, sending the yield all the way up to 5.22%.

The moves followed a surprise hike in New Zealand and came one day after the European Central Bank took rates up by a quarter-point. Meanwhile, the Bank of England left its benchmark rate unchanged, as had generally been predicted.