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Dow Jones Industrial Average leads decline as rising Treasury yields rattle nerves

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U.S. stocks edged lower on Wednesday as a sharp rise in Treasury yields spooked investors as they considered whether recent data would change the direction of interest rates.

The benchmark S&P 500 (^GSPC) fell 0.7%, while the Dow Jones Industrial Average (^DJI) lost about 0.9%, a loss of nearly 350 points. The Nasdaq Composite Index (^IXIC) also fell more than 0.7%.

Stocks have been selling off following the failed bond auction as investors worry about rising Treasury yields and fear the Federal Reserve will keep interest rates high for a long time.

The 5-year Treasury yield rose to a four-week high on Tuesday, while the 10-year Treasury yield (^TNX) surpassed the key 4.5% level. On Wednesday, the benchmark yields rose further, trading around 4.57%.

Those concerns appear to outweigh hopes for AI growth, which has ridden Nvidia Inc.’s (NVDA) stock rally after the company’s earnings report and propelled the Nasdaq to an all-time high.

Investors are trying to figure out what a better-than-expected consumer confidence reading released on Tuesday means for the Fed’s policy decisions, but they are bracing for it to be a long wait before they cut rates after repeated warnings from officials.

read more: How does the labor market affect inflation?

The Fed’s Beige Book, due for release later on Wednesday, could provide more information ahead of Friday’s release of PCE, the central bank’s preferred inflation measure.

live3 updates

  • American Airlines cuts profit outlook, shares fall

    American Airlines (AAL) shares fell more than 15% Wednesday morning after the airline cut its expected profits for the current quarter.

    The airline now expects earnings per share in the range of $1 to $1.15 for the current quarter, down from a previous outlook of $1.15 to $1.45. It also now expects total revenue per available seat to decline 5% to 6% year over year. American had previously expected that metric to decline 1% to 3%.

    The company also announced that chef commercial officer Vasu Raja will leave the company in June.

    “The cut is likely the result of a combination of increased domestic competition and declining corporate market share,” said Bank of America analyst Andrew Didla.

    As Didla points out, American’s weak forecast comes amid a seemingly solid demand outlook for the airline industry: As Axios reported this morning, five of the busiest travel days have occurred in the past two weeks, according to TSA data going back to 2001. This includes a record 2.95 million travelers on the Friday before Memorial Day Weekend.

  • Yields rise, stock prices fall

    Stocks fell at the open as a sharp rise in Treasury yields spooked investors who were already weighing whether the recent data would affect interest rates.

    The benchmark S&P 500 (^GSPC) fell 0.7%, while the Dow Jones Industrial Average (^DJI) lost about 0.9%, a loss of nearly 350 points. The Nasdaq Composite Index (^IXIC) also fell more than 0.7%.

    On Tuesday, the yield on the five-year Treasury note approached a four-week high, while the yield on the 10-year Treasury note (TNX) surpassed the key 4.5% level. On Wednesday, the benchmark yields rose further, trading around 4.57%.

  • The economic outlook brightens…

    Who doesn’t want some bright, positive macro data on a Wednesday? Not this guy, who’s always looking for some positive news.

    I am truly prepared for that.

    More than eight in 10 chief economists now expect the global economy to recover or stabilise this year, according to a new survey released today by the World Economic Forum (WEF) – nearly double the proportion in their January report.

    The proportion of people who expect the global economic situation to worsen has fallen to 17% from 56% in January.

    New research from the World Economic Forum suggests inflation may have room to cool further.New research from the World Economic Forum suggests inflation may have room to cool further.

    New research from the World Economic Forum suggests inflation may have room to cool further. (World Economic Forum)



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