It was a bruising day on Wall Street, with markets sliding sharply amid a fresh surge in long-term Treasury yields and growing alarm over the US deficit.
Broad market sell-off
The Dow Jones Industrial Average fell a staggering 816 points, or 1.9%, to close at 41,860. The S&P 500 lost 1.6%, and the tech-heavy Nasdaq slid 1.4%, snapping its three-day winning streak. It marked the end of a six-day run for the S&P and the first negative session in four for the Nasdaq.
This decline comes on the heels of a broader rally that saw the S&P 500 and Nasdaq gain over 13% and 18% respectively in the past month. But Wednesday’s session served as a harsh reminder that macroeconomic risks are far from settled.
Surging yields rattle investors
At the heart of today’s sell-off: soaring Treasury yields. The 30-year bond climbed above 5.09% — its highest level since October last year — while the benchmark 10-year yield touched 4.59%. A poorly received 20-year bond auction added fuel to the fire, suggesting investors are growing wary of financing US debt.
Traders are responding to fears that a new US budget bill, being rushed through ahead of the Memorial Day deadline, will expand an already ballooning deficit. The proposed measure includes new tax cuts with only partial offsets, raising the prospect of even more borrowing.
Beyond the daily volatility, strategists are warning of deeper concerns. Moody’s recent US credit downgrade underscored mounting doubts about fiscal discipline, while analysts warn that persistent deficits — now nearing 7% of GDP — are unsustainable without major policy reform.
Big losses across sectors
Retail giant Target fell 5.2% after cutting its full-year sales outlook, citing tariff-related uncertainty and backlash to its recent DEI policy changes. UnitedHealth was the Dow’s worst performer, dropping nearly 6% after a downgrade from HSBC. Apple and Amazon also retreated as rising rates weighed on tech valuations.
Commodities and the dollar
Brent crude is trading 1.12% lower at US$64.65 a barrel.
WTI crude is trading 1.13% lower at US$61.33 a barrel.
Spot gold is trading 0.75% higher at US$3314.81 an ounce.
Gold futures (COMEX) are trading 1.01% higher at US$3346.20 an ounce.
One Australian dollar is buying 64.36 US cents.
Futures
The SPI futures are pointing to an 80 point fall.
