Wall Street Stocks Plunge As Worries Grow About U.S. Debt
U.S. stocks closed sharply lower on Wednesday as Treasury yields jumped amid concerns that the U.S. government debt could balloon by trillions of dollars if Congress passes President Donald Trump’s proposed tax cut bill.
All three major Wall Street indexes closed with their biggest daily losses in a month. Small-cap stocks also fell sharply, with the Russell 2000 index posting its biggest daily loss since April 10.
Long-dated Treasury yields rose after the Treasury Department’s sale of $16 billion in 20-year bonds met weak investor demand. The yield on the benchmark 10-year U.S. Treasury note rose 10.8 basis points to 4.589%. During the session, the 10-year yield hit its highest since mid-February.
A congressional committee set an unusual hearing as House Republicans try to overcome internal divisions over proposed spending cuts, including to the Medicaid health program.
Nonpartisan analysts say the Republican bill could add between $3 trillion and $5 trillion to the federal government’s $36.2 trillion debt.
“There are a number of headlines, all of which have consequences if they actually happen,” said Michael Farr, chief executive officer at investment advisory firm Farr, Miller & Washington in Washington. “A lot of these things are threats that fade rather quickly and the market is trying to digest what’s important or what’s material or what might be negotiating bluff on behalf of the administration.”
The Dow Jones Industrial Average fell 816.80 points, or 1.91%, to 41,860.44, the S&P 500 dropped 95.85 points, or 1.61%, to 5,844.61 and the Nasdaq Composite dropped 270.07 points, or 1.41%, to 18,872.64.
Source: Investing.com
