Dow drops 540 points, Nasdaq falls 2.6% as 10-year yield rises to 2-year high; European stocks fall as bond yields spike; Ubisoft up 12% on M&A speculation 
The major averages fell sharply Tuesday as government bond yields hit Covid-era highs and after Goldman Sachs reported disappointing earnings. The Dow Jones Industrial Average slipped 543.34 points, or 1.5%, to close at 35,368.47. The S&P 500 fell 1.8% to 4,577.11, and the Nasdaq Composite declined 2.6% to 14,506.90, hitting its lowest level in three months. 
The technology-focused Nasdaq sits more than 10% from its most recent high and closed below its 200-day moving average for the first time since April 2020. The small-cap benchmark Russell 2000 slid nearly 3.1%. U.S. markets were closed Monday due to the Martin Luther King Jr. holiday. 
Goldman Sachs shares dropped nearly 7% 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 a gauge of where the Federal Reserve will set short-term borrowing rates. 
Rates rose along the yield curve, with the benchmark 10-year note topping 1.87%, its highest since January 2020. The 10-year yield started 2022 around 1.5%. 
Elsewhere, Microsoft dipped 2.4% after announcing the software giant will buy video game company Activision Blizzard in an all-cash transaction valued at $68.7 billion. Shares of Activision Blizzard surged 25.9%. Retailer Gap shares fell 6.7% after Morgan Stanley downgraded the retailer. 

The pan-European Stoxx 600 ended the day down 1%, with tech stocks dropping 2.2% to lead the losses as most sectors and major bourses slipped into negative territory. Oil and gas shares were the standout gainers, rising 1.1% on the back of a surge in oil prices amid rising tensions in the Middle East. 
At the top of the European blue chip index, French video game publisher Ubisoft climbed 11.9% after news that Microsoft has agreed to acquire Activision Blizzard for nearly $69 billion. 
Source: CNBC, Investing.com