US stocks plunged and Treasury yields rose on Wednesday as investors panicked over President Trump’s tax bill, which could add billions to the budget deficit and faces a rare 1 a.m. hearing aimed at winning over dissenters.
The Dow Jones Industrial Average slumped 768 points, or 1.8%, by approximately 3:50 p.m. ET after losing 50 points the day before. The S&P 500 and the Nasdaq fell 1.5% and 1.3%, respectively.
Long-term yields jumped again, with the 30-year Treasury yield increasing to 5.083% and the 10-year yield hitting 4.587%.
“Thirty-year real treasury yields haven’t been this high since 2007. The market appears to be voting against the current policy mix,” Kathy Jones, chief fixed income strategist at Charles Schwab, said in a post on X.
Yields gained after a dismal Treasury bond action that saw few bidders for $16 billion worth of 20-year yields, while the US dollar weakened and appeared poised for its third day of declines.
Treasury yields, which spike when bond prices come down, have been on a climb for weeks as bond investors fear the GOP tax-and-spending bill, which includes tax cuts that are expected to increase budget deficits by about $3 trillion over the next decade.
Larger budget deficits typically speed up Treasury issuances so the government can continue to pay for expenses and bond investors are worried that demand won’t keep up with supply.
Trump’s hefty tariffs have also pushed yields higher as investors remain concerned about the threat of reheated inflation, as well as rising yields overseas.
Higher yields could mean serious pain for consumers, since the buying and selling of government debt is closely linked to interest rates on mortgages, credit cards and loans.
Moody’s late last week downgraded the US for the first time since assigning it a perfect credit rating in 1917, attributing it to the cost of financing the government’s budget deficit. That ratings change sent Treasurys on a volatile ride.
Wednesday’s stock decline was worsened by losses from UnitedHealth after a bombshell report revealed the company made secret payments to nursing homes to reduce hospital transfers.
Shares in the healthcare giant, whose chief executive was fatally shot last December in midtown Manhattan, plunged 5.7%.
Target also saw its stock plummet 5% after slashing its full-year forecast and reporting weak discretionary spending in the first quarter. Anxiety around the tariffs and boycotts protesting its rollback of DEI policies slammed the retailer.
Credit: Source link
