Wall Street indices posted significant losses during Wednesday’s trading session, pressured by rising U.S. Treasury yields and growing fears over the potential escalation of federal debt if the former president’s proposed tax cut plan is approved. Markets are increasingly concerned that implementing this plan could add billions of dollars to the national debt over the coming years, intensifying pressure on the economy and financial markets.
This decline came amid cautious trading, with the three major indexes recording their steepest daily losses in nearly a month. The Dow Jones Industrial Average dropped by 816.80 points, or 1.91%, closing at 41,860.44. The S&P 500 fell by 95.85 points, or 1.61%, to finish at 5,844.61, while the Nasdaq Composite declined by 270.07 points, or 1.41%, ending the session at 18,872.64.
At the same time, small-cap stocks saw sharp declines, with the small-cap index recording its worst daily performance since April 10, impacted by the same concerns weighing on the broader market.
Meanwhile, long-term U.S. Treasury yields rose after the Treasury Department saw weak demand for a $16 billion sale of 20-year bonds. The yield on the 10-year Treasury note climbed by 10.8 basis points to reach 4.589%, marking its highest level since mid-February.
Market tension escalated further after a special congressional hearing highlighted internal disagreements within the Republican Party over proposed spending cuts, including reductions to healthcare programs. Nonpartisan analysts warned that the proposed legislation could add between $3 trillion and $5 trillion to the national debt, which currently stands at approximately $36.2 trillion.
One economist commented:
“There are plenty of headlines that could have major implications if realized, but many of them tend to fade quickly. Markets are now trying to differentiate between actual developments and what might just be negotiating tactics by the administration.”
Across sectors, 10 out of the 11 industries in the S&P 500 ended the session lower. The sharpest losses were seen in real estate, healthcare, financials, utilities, consumer discretionary, and technology, while the communication services sector managed to post modest gains.
These movements reflect mounting anxiety in the markets, amid uncertainty surrounding fiscal policy, rising yields, and broader economic imbalances. As investors monitor the evolution of the tax plan and ongoing political negotiations, caution remains dominant, with markets awaiting clearer signals about the direction of the U.S. economy in the coming days.
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