United States benchmarks closed lower on Wednesday (Thursday AEST) as Treasury yields surged amid intensifying concerns about the federal deficit.
The Dow Jones Industrial Average plunged 816.8 points, or 1.9%, to finish at 41,860.4. The S&P 500 declined 95.8 points, or 1.6%, to 5,844.6, while the tech-heavy Nasdaq Composite shed 270.1 points, or 1.4%, to close at 18,872.6.
The sell-off followed a sharp spike in long-dated bond yields, triggered by fears that a new U.S. budget bill could exacerbate the country's already substantial fiscal deficit.
The proposed measure will likely pass as lawmakers inch closer to a compromise on state and local tax (SALT) deductions ahead of Speaker Mike Johnson’s self-imposed Memorial Day deadline.
The 30-year Treasury yield rose 2.4% to around 5.089%, its highest level since October 2023, while the 10-year yield lifted 2.5% to trade at 4.597%.
Bond yields had already been volatile in April, surging after investor concerns over President Donald Trump’s proposed tariffs shook confidence in the traditionally safe U.S. debt market.
Rising rates weighed heavily on technology stocks. Nvidia dropped 1.9%, Apple lost 2.3%, and Tesla slid 2.7%, as higher borrowing costs typically pressure high-growth sectors.
Among individual companies, Target fell 5.2% after the retailer lowered its full-year sales guidance. Brian Cornell, chair and chief executive officer of Target Corporation cited a “highly challenging environment”.
UnitedHealth was the worst-performing Dow component, tumbling 5.8% following a downgrade by HSBC, which cited concerns over earnings growth and regulatory pressures.
