Wall Street routed on Tuesday as the yields on U.S. government bonds skyrocketed. Investors are anticipating the Fed to take harsh measures and will rise interest rate as early in March in order to contain galloping inflation. All three major stock indexes ended in negative territory.How Did The Benchmarks Perform?The Dow Jones Industrial Average (DJI) dropped 1.5% or 543.34 points to close at 35,368.47. Notably, 23 components of the 30-stock index ended in red while 7 in green.The tech-heavy Nasdaq Composite finished at 14,506.90, tumbling 2.6% or 386.86 points due to weak performance by large-cap technology stocks. The tech-laden index has fallen nearly 9.7% from its recent closing high recorded on Nov 19 and fell below its 200-day moving average for the first time since Apr 2020.Meanwhile, the S&P 500 tanked 1.8% to end at 4,577.11. Ten out of eleven sectors of the benchmark index closed in negative zone while one in the green. The Technology Select Sector SPDR (XLK), the Financials Select Sector SPDR (XLF) and the Consumer Discretionary Select Sector SPDR (XLY) tanked 2.4%, 2.2% and 1.9%, respectively.The fear-gauge CBOE Volatility Index (VIX) was up 18.8%% to 22.79. A total of 11.9 billion shares were traded on Tuesday, higher than the last 20-session average of 10 billion. Decliners outnumbered advancers on the NYSE by a 5.52-to-1 ratio. On Nasdaq, a 4.93-to-1 ratio favored declining issues.Spike in Government Bond YieldsThe yield curve of the U.S. government bonds has stiffened significantly in anticipation of stricter measures taken by the Fed to combat soaring inflationary pressure. The yield on the benchmark 10-Year U.S. treasury Note rose 9.5 basis points to 1.866%, marking its highest level in 2 years.The yield on the short-term U.S. 2-Year Treasury Note, which is most sensitive to a Fed rate hike, shot up 7.3 basis points to 1.038% to reach the highest level since late February 2020. The yield on the long-term U.S. 30-Year Treasury Note also rose 9 basis points to 2.192%.Higher market risk-free returns mean a higher discount rate for future cash flows from stock investing. This will affect the growth-oriented stocks — especially the technology and consumer discretionary stocks — as these stocks generally provides higher returns over a long term.Moreover, these companies depend on easy access to cheap credit to expand their businesses. Market participants are expecting that the Fed may hike the benchmark leading rate for the first time since March 2020. Notably, the Fed reduced the market interest rate to the current level of 0-0.25% to ensure adequate liquidity in the system to combat the unprecedented economic devastation led by the pandemic.News on M&A Front Microsoft Corp. MSFT is making a major push into the video game space with the announcement of its plan of acquiring Call of Duty maker Activision Blizzard Inc. ATVI in an all-cash deal. The acquisition will strengthen Microsoft’s game development expertise, as it will add 30 internal game development studios.Microsoft will be paying $95.00 per Activision share, with total transaction value being worth $68.7 billion, making it the company’s largest deal ever. Post completion of the transaction, Microsoft will become the world’s third-largest gaming company, trailing only Tencent Holdings Ltd. TCEHY and Sony Group Corp. SONY .Shares of Microsoft fell 2.4% while the stock price of Activision Blizzard soared 25.9%. Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Stocks That Have Made HeadlineJ.B. Hunt's Q4 Earnings & Revenues Beat, Surge Y/YJ.B. Hunt Transport Services JBHT reported better-than-expected fourth-quarter 2021 results. (Read More) 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.3% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Activision Blizzard, Inc (ATVI): Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT): Free Stock Analysis Report Tencent Holding Ltd. (TCEHY): Free Stock Analysis Report Sony Corporation (SONY): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research