The Dow Jones Industrial Average plummeted 817 points, or 1.9%, on Wednesday as bond yields surged amid deficit concerns over a tax cut bill in the US House of Representatives. The sell-off coincided with a spike in 10-year Treasury yields, reaching their highest level since February.
The Congressional Budget Office estimates that President Trump’s tax policies will add $3.8 trillion to the national debt. The “One Big Beautiful Bill Act” includes changes to Medicaid and immigration policy, among other measures, aimed at passing by Memorial Day.
A credit downgrade from Moody’s last week further exacerbated volatility in Treasury markets. When bond yields rise, businesses face higher borrowing costs, making it less likely they will expand or hire new employees. This could lead to an economic slowdown.
As investors worry about the impact of rising interest rates on consumer loans and business operations, the market is bracing for further fluctuations. The sell-off serves as a reminder that deficit concerns can have far-reaching effects on the economy.
Source: https://abcnews.go.com/Business/dow-closes-800-points-bond-sell-off-rattles/story?id=122047944