The Dow has lost ground for five straight days. A 425-point rout on Tuesday sent the index back into negative territory for the year.... Rising bond yields are putting pressure on an already vulnerable stock market that has been attempting to claw its way back from correction territory -- 10% off the record high in late January.

The yield on the 10-year US Treasury note breached 3% for the first time in more than four years Tuesday morning. Long-term bond yields have been climbing in part because of inflation fears. Inflation eats away at the value of fixed bond payments, leading investors to demand a higher yield in return.

Car loans and mortgage prices are linked to the benchmark 10-year note, and rising yields will raise borrowing costs for companies and consumers. Higher yields in the bond market could also become more attractive than volatile stocks for many investors.


On Tuesday, Caterpillar (CAT), an industrial bellwether, warned on its earnings call that margins wouldn't get any higher and the last three months were its "high-water mark" for the year. Caterpillar lost 6% on Tuesday and sent a chill across the market.

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