In the afternoon trading session, U.S. stocks experienced a substantial decline, driven by increasing Treasury yields and apprehensions regarding the expanding U.S. deficits. The S&P 500 and Nasdaq both saw declines of 1.3% and 1%, respectively, while the Dow Jones plunged over 700 points. This downturn followed a lackluster $16 billion auction of 20-year Treasury bonds, leading to a surge in yields on longer-term bonds. Notably, the 30-year yield escalated to approximately 5.08%, marking its highest level since 2023. This rise is partly fueled by concerns that a proposed tax-and-spending package in Washington could exacerbate the federal deficit.
Adding to the market pressure were retail earnings, with Target cutting its forecast by 4% and cautioning about decreased consumer demand. In contrast, Lowe’s and TJX maintained their current projections. UnitedHealth's shares dropped by 5% following reports of payments to nursing homes aimed at minimizing hospital transfers. Conversely, Alphabet enjoyed a 3.5% increase, driven by fresh investments in artificial intelligence.
Market participants are also keeping a close eye on the weakening U.S. dollar and the potential repercussions of the ongoing G-7 summit, which continue to inject uncertainty into the market outlook.
