NEW YORK — U.S. stocks tumbled Wednesday as rising Treasury yields and renewed fears over the country’s ballooning debt sent shockwaves through Wall Street, erasing recent gains and reigniting concerns about the stability of the broader market.
The Dow Jones Industrial Average (^DJI) plunged more than 800 points, or 1.9%, while the S&P 500 (^GSPC) shed 1.6% and the tech-heavy Nasdaq Composite (^IXIC) slipped 1.4%. The sharp downturn came after a weak 20-year bond auction at 1 p.m. ET that sent Treasury yields surging, rattling investors already on edge about U.S. fiscal policy and inflation.
The 10-year Treasury yield (^TNX) spiked by 11 basis points to 4.59%, while the 30-year yield (^TYX) jumped 12 basis points to 5.09%, approaching its highest levels since 2023. Rising yields tend to pressure equities by offering more attractive alternatives to riskier stock holdings and increasing borrowing costs for businesses.
The selloff ended a six-day winning streak for the S&P 500, which had gained ground on optimism around a temporary truce in U.S.-China trade tensions. But that relief has faded quickly, with markets now fixated on Washington’s debt spiral and the fate of President Donald Trump’s sweeping tax-and-spending bill.
Trump’s Tax Bill Spurs Market Anxiety
Republican lawmakers are scrambling to unify support around President Trump’s proposed tax legislation, which they hope to bring to a vote in the House soon. The bill, which includes significant tax breaks, has added to mounting deficit worries. Analysts say the prospect of increased government spending without a clear funding path is spooking bond markets — and, by extension, equities.
“Investors are watching the bond market like hawks,” said one Wall Street strategist. “When you see 20-year auctions fall flat and yields spike, it’s a signal that fiscal risks are flashing red.”
Tech, Trade, and Tariffs Add to Jitters
Tensions between the U.S. and China resurfaced just days after a ceasefire in tariff hostilities, as Washington warned against the use of AI chips by Chinese tech giant Huawei. Beijing responded sharply, saying the move jeopardizes fragile trade negotiations. The friction has raised fresh doubts about the long-term stability of the trade deal and prompted fears of further economic fallout.
Meanwhile, retailers are feeling the squeeze from Trump’s tariff policy. Target missed its Q1 earnings expectations and slashed its full-year outlook, while sidestepping questions on whether it will follow Walmart in passing tariff costs on to consumers. Trump recently told retailers to “eat” the cost of duties — a directive analysts warn could compress margins.
Bitcoin Breaks Record Before Reversing
Adding to the market drama, Bitcoin (BTC-USD) briefly soared past $109,000, hitting a new all-time high before retreating alongside broader risk assets. The cryptocurrency’s meteoric rise and swift pullback underscored the current market volatility and investor uncertainty.
Currency Concerns and Global Pressure
The U.S. dollar also dipped to a two-week low, with traders monitoring the G7 summit for signals on whether the Trump administration may adopt a weaker-dollar stance. A more dovish currency approach could stoke inflation and further fuel bond market volatility.
As the S&P 500 closed at 5,844.61, down 95.85 points, market watchers warned that mounting fiscal concerns, geopolitical friction, and economic uncertainty could continue to weigh on investor sentiment in the weeks ahead.
“Between the debt, trade, tariffs, and the Fed’s posture, it’s a perfect storm,” one analyst noted. “The next few weeks will be a real test of market resilience.”
