Stocks open lower as Treasury yields surge

The major averages fell sharply Tuesday after Goldman Sachs reported disappointing earnings and as government bond yields hit Covid-era highs.

The Dow Jones Industrial Average slipped by 440 points, or 1.2%. The S&P 500 fell 1.25%, and the Nasdaq Composite declined 1.75%. U.S. markets were closed Monday due to the Martin Luther King holiday.

Goldman Sachs shares ticked more than 7% lower on Tuesday after the bank missed analysts' expectations for its fourth quarter earnings. Goldman's operating expenses surged 23% on increased pay for Wall Street employees.

Meanwhile, treasury yields posted strong gains. The closely watched 2-year yield broke above 1% for the first time since February 2020, the month before the pandemic declaration that sent the U.S. economy into recession. The 2-year Treasury is seen as gauge of where the Federal Reserve will set short-term borrowing rates.

Rates rose along the yield curve, with the benchmark 10-year note hitting 1.85%, its highest since January 2020.

Elsewhere,Microsoft dipped 2.5% after announcing the software giant will buy video game company Activision Blizzardin an all-cash transaction valued at $68.7 billion. Shares of Activision Blizzard surged 30%.

Retailer Gap shares fell 6.4% after Morgan Stanley downgraded the retailer.Tesla dropped 2.7%.