Wall Street Stocks Dip as Treasury Yields Climb Amid Concerns Over Trump’s Tax Cuts

By Chibuike Oguh

NEW YORK () – U.S. stocks declined on Wednesday as Treasury yields increased and investors evaluated the implications of President Donald Trump's suggested tax cut plan, which may lead to an expansion of the federal deficit.

The three primary Wall Street indices experienced declines. Both the key S&P 500 index and the tech-focused Nasdaq continued their downward trajectory as longer-term Treasury yields increased after the Treasury Department issued $16 billion worth of 20-year bonds. This led to an uptick in the yield for the standard U.S. 10-year notes by 10.8 basis points to reach 4.589%. Throughout the trading period, the 10-year yield reached its peak level since early February.

A congressional panel organized an uncommon hearing as House Republicans aimed to bridge internal disagreements over suggested budget reductions, particularly those targeting the Medicaid healthcare initiative.

Analysts from non-partisan organizations indicated that the Republican proposal might increase the federal government's $36.2 trillion debt by somewhere in the range of $3 trillion to $5 trillion.

" numerous headlines exist, each with repercussions should they actually occur,” stated Michael Farr, CEO of the investment advisory company Farr, Miller & Washington based in Washington. “A lot of these issues turn out to be minor concerns that dissipate rapidly, and now the market is attempting to determine which elements hold genuine significance or represent substantial developments versus mere posturing from the administration.”

At 02:19 PM, the Dow Jones Industrial Average dropped 710.26 points, or 1.66%, closing at 41,968.72. The S&P 500 shed 76.43 points, or 1.29%, ending up at 5,864.03, while the Nasdaq Composite declined by 197.29 points, or 1.03%, settling at 18,945.43.

Nine out of the eleven S&P 500 sectors declined, with real estate, health care, utilities, consumer discretionary, and finance leading the way down. In contrast, communication services stocks showed gains.

The parent company of Google, Alphabet, saw an increase of 3.4%, whereas Nvidia experienced a decline of 1.3%, and Meta Platforms dropped by 0.1%.

UnitedHealth Group saw a drop of 5% following a Guardian article which revealed that the healthcare giant had quietly provided substantial financial incentives to nursing homes. These payments were made with the intention of decreasing hospital transfers for patients who were not well. In response to this news, HSBC revised its rating for the company from "hold" to "reduce."

The target dropped 4.5% following a reduction in its yearly prediction as a result of decreased expenditure on non-essential items.

Wolfspeed saw a dramatic decline of almost 62% after reports emerged suggesting that the semiconductor company was planning to declare bankruptcy within the coming weeks.

The S&P 500 has risen over 17% since its low point in April, following Trump's retaliatory tariffs which caused turbulence in worldwide financial markets.

Morgan Stanley changed its position on U.S. stocks to "overweight," citing continued growth in the global economy at a slow pace due to uncertain policies.

Issues falling outnumbered those advancing by a ratio of 4.98 to 1 on the New York Stock Exchange. Additionally, there were 176 new highs and 78 new lows recorded on the same exchange.

The S&P 500 saw 15 new 52-week highs along with 2 new lows, whereas the Nasdaq Composite noted 51 new peaks and 78 new troughs within the same period.

(Reported by Chibuike Oguh in New York; additional reporting by Shashwat Chauhan and Kanchana Chakravarty in Bangalore; Edited by Pooja Desai, Devika Syamnath, and David Gregorio)