The 10-year hit the key 3% level for the first time since 2014 — and it could have big implications for stocks

The 10-year yield climbed above 3% for the first time since January 2014.
The yield has been rallying amid worries that tariffs announced by President Donald Trump will spark inflation.
Those worries have some suggesting four rate hikes by the Federal Reserve could be back in the picture for this year.
Stock traders have been wary of rising interest rates, worrying it could dampen interest in shares.

Yields on 10-year Treasury notes on Tuesday morning finally reached the elusive 3% level, which the benchmark interest rate hadn't seen since January 2014.

The yield flirted with the level all day Monday, but it was Tuesday's stronger-than-expected home prices as measured by the S&P/Case-Shiller index that pushed it across the line.

The rise in the 10-year yield, a benchmark for things like home mortgages and company borrowing, has the potential to dampen spending as consumers and companies spend more to service their debt. It's also closely watched by stock traders.

It has been grinding higher since President Donald Trump's announcement early last month of plans for tariffs on imports of steel and aluminum sparked concerns about inflation returning to the US economy. But the gains intensified last week, with the 10-year climbing almost 20 basis points since Wednesday as fears of rising inflation related to tariffs surfaced.

First, the Federal Reserve's Beige Book pointed to growing inflation worries, with the Fed saying that "there were widespread reports that steel prices rose, sometimes dramatically, due to the new tariff."

Then the Philadelphia Fed's prices-paid index surged on the back of Trump's tariff announcement.

"Price increases for purchased inputs were reported by 59% of the manufacturers this month, up notably from 44% in March," the report said.

That has prompted more talk that the Fed could hike interest rates as many as four times this year; it has previously said it expects to do so three times. It has already lifted them once this year, at the March meeting.

Stock traders are watching. Conventional wisdom on Wall Street is that stocks, the riskier asset class, lose some of their appeal when bond yields rise. Higher yields raise the discount rates that investors use in calculating valuations to determine the present value of cash flows.

Jeffrey Gundlach, the founder of DoubleLine Capital, predicted in January that returns on the S&P 500 this year would be negative, saying his forecast "would become an extraordinarily strong conviction as the 10-year starts to make an accelerated move above 3%."

The S&P 500 was up about 0.4% when the 10-year first hit 3% just before 10 a.m. ET. It has since fallen into negative territory, currently down 0.26%.