U.S. equities tumbled sharply on Wednesday, extending losses after a poorly received Treasury auction sent bond yields soaring to multi-month highs. The selloff accelerated as 30-year Treasury yields spiked to 5.08% – their highest level since October 2023 – while 10-year yields jumped to 4.59%, creating a broad risk-off environment across financial markets.
The market rout reflected growing investor anxiety about Washington’s fiscal trajectory, with concerns mounting that proposed tax cuts could add trillions to the already-bloated U.S. debt burden. This bearish sentiment manifested in across-the-board declines, with the Dow Jones Industrial Average plunging 817 points (1.9%) to close at 41,860 after touching an intraday low of 41,785. The S&P 500 mirrored this weakness, dropping 96 points (1.6%) to finish at 5,844.
Wednesday’s market action underscored how quickly Treasury market volatility can spill over into equity markets, particularly when combined with lingering concerns about fiscal sustainability. The simultaneous surge in yields and selloff in stocks suggests investors are growing increasingly nervous about how debt-funded tax policies might constrain the Federal Reserve’s policy options moving forward. Market participants will be closely watching upcoming economic data and Treasury auctions for signs of whether this risk-off dynamic has further to run.
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