NEW YORK — Wall Street took a sharp downturn on Tuesday, overwhelmed by escalating pressures from the bond market that dragged U.S. stocks further away from their recent record highs.

The S&P 500 plummeted 0.7%, marking its toughest day in a month after briefly sinking by 1.5%. Meanwhile, the Dow Jones Industrial Average slipped 249 points, or 0.5%, and the Nasdaq composite fell 0.8%. Despite the drop, all three indices remain within striking distance of their all-time highs.

As usual, the giants of the tech world spearheaded the decline. Companies like Nvidia, which is pivotal for the burgeoning AI revolution, saw a 2% dip, contributing significantly to the S&P 500's downturn. Similarly, Amazon fell by 1.6%, while Apple experienced a 1% drop.

In a world where bond yields are on the rise, the 10-year Treasury yield climbed to 4.27% from 4.23%, indicating that as bonds become more lucrative, investors are losing their appetite for expensive stocks.

Globally, long-term bond yields are rising, fueled by fears over governments’ ability to manage their escalating debts. In the U.S., the bond market feels further strain from President Trump’s ongoing criticism of the Federal Reserve for not lowering interest rates sooner. There’s concern that a less independent Fed might shy away from tough decisions necessary to combat inflation long-term.

Tuesday also served as a pivotal moment following a federal appeals court ruling that questioned Trump’s authority regarding extensive tariffs imposed worldwide, though the tariffs remain in place for now.

As confusion looms from these tariffs impacting the global economy, experts like Scott Wren from Wells Fargo Investment Institute warn that diminished revenue could force the U.S. government to increase borrowing to cover expenses.

In other financial signals, gold prices surged to new heights, often regarded as a safe haven during uncertain times.

Adding to the market turmoil, a report indicated that U.S. manufacturing contracted more than expected last month, with many businesses citing chaos from tariffs as a critical issue. One chemical firm noted that uncertainty surrounding tariffs is weakening orders across most products.

This dismal manufacturing data could provide the Federal Reserve with a chance to cut interest rates at their upcoming meeting — a widely anticipated move among traders. However, upcoming economic reports may influence this outlook.

A key highlight this week will be Friday’s jobs report, where expectations are set for a slight increase in hiring. Economists remain wary following last month’s disappointing employment figures, raising concerns about economic health and expectations for Fed rate cuts.

On Wall Street, Constellation Brands faced a steep drop of 6.6% after revealing a slowdown in sales of its premium beers, prompting a profit forecast revision. Kraft Heinz also suffered, plummeting by 7% after announcing plans to split into two distinct companies following a merger that had created one of the largest food entities globally.

One of the new companies will contain popular brands like Heinz and Philadelphia cream cheese, while the other will encompass Oscar Mayer and Kraft Singles, with official names to be revealed soon.

Among the few gainers, PepsiCo crept up by 1.1% after news that Elliott Investment Management, an influential investor, suggested they revamp strategies to enhance growth.

In summary, the S&P 500 ended down 44.72 points to close at 6,415.54, while the Dow fell 249.07 to 45,295.81, and the Nasdaq lost 175.92 to finish at 21,279.63.

Overseas, European indexes tumbled, with Germany’s DAX dropping 2.3%. Asia had a mixed bag, with Seoul gaining 0.9% and Hong Kong down 0.5%.