2018.04.2420:00:00UTC+00Wall Street Drops as Investors Worry Over Higher Borrowing Rates

U.S. stocks declined on Tuesday, paring earlier gains, as investors worry about higher borrowing rates for companies already facing rising costs, while Caterpillar hinted that economic growth may slow later in the year.

The Dow Jones industrial average closed 424.56 points lower at 24,024.13 after rising as much as 131 points shortly after the open of trading. The 30-stock index dropped 751.21 points from its session high all the way down to its lows of the day.

The S&P 500 dropped 1.3 percent to 2,634.56. The Nasdaq composite lost 1.7 percent at 7,007.35 as shares of Facebook, Amazon, Alphabet and Netflix all fell over 3.5 percent.

On Tuesday, 10-year Treasury yields reached the highly anticipated 3 percent mark for the first time in four years. The 10-year yield, a benchmark for global borrowing costs, has been propelled higher by a combination of concerns over inflation, growing debt supply and rising Federal Reserve borrowing costs.

Caterpillar posted earnings and revenue that surpassed expectations, sending the stock higher initially. However, the industrial giant's shares retreated later in the day, falling 6.2 percent. Caterpillar CFO Bradley Halverson said during a conference call that the company's outlook assumed that the first quarter would be "the high watermark for the year."

The construction equipment maker is a barometer for the state of the economy and the overall market. Caterpillar's stock has a 0.81 correlation with the Dow over the last six months, according to Kensho. A correlation of 1 would mean the two move in lockstep with each other.

Diversified industrial manufacturer 3M added the most pressure on the Dow. Its shares dropped 6.83 percent after the company reported in-line profits as lower taxes offset a miss in operating profits and the company lowered its 2018 earnings forecast.

So far, 24 percent of S&P 500 companies have posted first-quarter results, with 77.1 percent coming in above the Street consensus, versus the 64 percent average since 1994. Analysts estimate 21.1 percent growth in earnings for the quarter, according to Thomson Reuters data.