Stocks Slide, Yields Climb as Tax-Cut Proposal Raises Deficit Concerns
U.S. equity markets declined on Wednesday as investor sentiment soured over concerns that President Donald Trump’s proposed tax-cut bill could widen the federal budget deficit. Meanwhile, Treasury yields climbed, reflecting rising fiscal uncertainty.
The Dow Jones Industrial Average fell 1.9% to 41,860.4, the S&P 500 dropped 1.6% to 5,844.6, and the Nasdaq Composite declined 1.4% to 18,872.6. All sectors closed lower except communication services, with real estate, healthcare, and financials losing over 2% each.
Bond Market:
The 10-year Treasury yield surged 10.4 basis points to 4.60%, while the 2-year yield rose 4.5 basis points to 4.02%, driven by deficit worries.
Commodities:
U.S. equity markets declined on Wednesday as investor sentiment soured over concerns that President Donald Trump’s proposed tax-cut bill could widen the federal budget deficit. Meanwhile, Treasury yields climbed, reflecting rising fiscal uncertainty.
The Dow Jones Industrial Average fell 1.9% to 41,860.4, the S&P 500 dropped 1.6% to 5,844.6, and the Nasdaq Composite declined 1.4% to 18,872.6. All sectors closed lower except communication services, with real estate, healthcare, and financials losing over 2% each.
Bond Market:
The 10-year Treasury yield surged 10.4 basis points to 4.60%, while the 2-year yield rose 4.5 basis points to 4.02%, driven by deficit worries.
Commodities:
- WTI crude oil fell 1.1% to $61.36 per barrel.
- Gold rose 1.1% to $3,320.60 per troy ounce.
- Silver climbed 1.7% to $33.75 per ounce.
Notable Movers:
- Fair Isaac (FICO) dropped 16%, the steepest fall in the S&P 500 for a second straight session, following remarks from Federal Housing Finance Agency Director Bill Pulte criticizing the cost of FICO’s credit scoring models. Equifax (EFX) also slid 6.7%.
- AES Corp. (AES) lost 9.9% after Jefferies downgraded the stock to underperform, citing concerns over financial stability and market positioning.
- Moderna (MRNA) declined 7.8% after pulling its application for a combined COVID-19 and flu vaccine. The move reverses recent gains fueled by new FDA booster guidelines.
- Palo Alto Networks (PANW) dropped 6.8% despite reporting better-than-expected Q3 earnings. While its product bundling strategy showed promise, lower-than-expected margins and higher operating costs weighed on sentiment.
Gainers:
- Alphabet (GOOGL, GOOG) rose nearly 3%, leading the S&P 500, after unveiling new AI tools at its Google I/Oevent. Analysts praised its AI integration and long-term strategy in the evolving search market.
- CME Group (CME) gained 1.4% on reports it may expand its aluminum delivery network to Hong Kong, boosting its presence in Asian metals trading.
- GE Vernova (GEV) edged up 0.7% to a record close after the Tennessee Valley Authority (TVA) filed plans to build a small modular nuclear reactor at its Clinch River site in Oak Ridge, Tennessee, using GEV's technology.