Highlights
Stocks dropped Wednesday as markets reacted to poor demand in the day's US Treasury 20-year bond auction amid concern over rising US deficits. The Dow Jones industrial average lost 1.9 percent, the S&P 500 dipped 1.6 percent, and the Nasdaq was down 1.4 percent. Bond yields rose while oil prices and the dollar fell.
Investors are focused on the progress of President Trump's tax and spending bill on Capitol Hill, with a House vote expected this week. Markets fear the bill will balloon US deficits and borrowing. That concern was aggravated by poor demand in the day's 20-year bond auction, the first sale of long-dated Treasury paper since the Moody's downgrade of US debt last week. The weak auction outcome sent bond yields rising further, with the more familiar 30-year bond yield rising 10 basis points to top 5.0 percent for the first time since October, 2023. That in turn spurred more selling in stocks into the close.
Megacaps were weak to weigh on the major averages, with chunky losses for Apple, Amazon, Broadcom, Meta, Microsoft, Nvidia, and Tesla. Among others, United Health was a big loser to weigh on the Dow. Lowe's declined after reporting disappointing profits for the quarter and Target dropped after cutting its annual guidance.
Investors are focused on the progress of President Trump's tax and spending bill on Capitol Hill, with a House vote expected this week. Markets fear the bill will balloon US deficits and borrowing. That concern was aggravated by poor demand in the day's 20-year bond auction, the first sale of long-dated Treasury paper since the Moody's downgrade of US debt last week. The weak auction outcome sent bond yields rising further, with the more familiar 30-year bond yield rising 10 basis points to top 5.0 percent for the first time since October, 2023. That in turn spurred more selling in stocks into the close.
Megacaps were weak to weigh on the major averages, with chunky losses for Apple, Amazon, Broadcom, Meta, Microsoft, Nvidia, and Tesla. Among others, United Health was a big loser to weigh on the Dow. Lowe's declined after reporting disappointing profits for the quarter and Target dropped after cutting its annual guidance.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
