The stock market saw a major drop on Wednesday afternoon as Treasury yields stayed elevated and Congress struggled to pass President Donald Trump’s budget plan. The Dow Jones Industrial Average plunged over 800 points, while the Nasdaq gave up earlier gains and turned negative.
Major Indexes Take a Hit
- Dow Jones dropped 1.9%, falling below its critical 200-day moving average
- S&P 500 lost 1.7%
- Nasdaq gave up early profits and ended down 1.6%
Trading volume was higher than Tuesday’s levels on both the NYSE and Nasdaq, while declining stocks outnumbered advancers by about 8-to-1 on the NYSE and nearly 3-to-1 on the Nasdaq.
10-Year Treasury Yield Climbs
The 10-year U.S. Treasury yield jumped 11 basis points to 4.59%, fueling fears about long-term interest rates and market pressure. Investors were also watching Capitol Hill as lawmakers rushed to secure enough votes for Trump’s tax reform package, which would limit state and local tax deductions.
Small-Caps and Growth Stocks Decline
- The Russell 2000 index fell 2.3%
- IBD 50 ETF, which tracks top growth stocks, lost 1.33%, breaking its three-day win streak
S&P Global PMI Data Coming Thursday
Investors are awaiting S&P Global’s PMI data on Thursday. Forecasts suggest a slight decline in both manufacturing (expected at 49.8) and services (expected at 50.6), signaling possible slowdown concerns.
Only One Sector Gains as Others Lag
Among the S&P 500 sectors, communication services was the only gainer. Real estate, healthcare, and utilities were the biggest losers in the session.
Gold Stocks Outperform in Weak Market
Gold stocks showed strength:
- Agnico-Eagle Mines rose nearly 3% and was added to IBD’s Leaderboard.
- Newmont moved closer to a breakout point at 57.16.
- AngloGold Ashanti tested support near 43.41.
Nvidia Falls Despite AI Focus
Nvidia dropped over 2% after CEO Jensen Huang revealed that U.S. export restrictions have not slowed China’s development of artificial intelligence. Huang said Nvidia has been losing market share to Chinese competitors over the past four years.
Alphabet Stock Soars on AI Innovations
Alphabet (Google) surged nearly 4% and was the top performer in both the S&P 500 and Nasdaq after its AI product showcase impressed analysts at its annual Google I/O event. The stock jumped past its 200-day moving average and broke out above the 170.63 level.
Other Stock Movers: Dycom, Tesla, and Bitcoin
- Dycom soared past its 207.20 buy point
- Argan entered a buy zone from 191.46
- Tesla slipped lower despite high hopes for its robotaxi launch in June. CEO Elon Musk also announced he will dedicate more time to the company.
- Bitcoin hit a record high of $109,298.77 as crypto sentiment improves following a Senate push for stablecoin regulations.
Dow Jones Update: UnitedHealth and Cisco
- UnitedHealth shares fell after HSBC downgraded the stock, dropping its price target to $270. The stock ended a three-day win streak and is still in a downtrend.
- Cisco Systems is forming a bullish pattern with a potential breakout at 65.75
- Apple struggled to rise above its falling 50-day moving average
Target and Palo Alto Miss Expectations
- Palo Alto Networks missed the mark despite beating earnings slightly. Shares dropped over 5% after the company issued cautious guidance.
- Target fell over 5% after missing both earnings and revenue forecasts. The company now expects sales to decline in the low single digits for the year.
Wolfspeed Crashes on Bankruptcy Rumors
Wolfspeed shares plummeted by 70% after reports that the chipmaker may file for bankruptcy to address rising debt. The stock has dropped sharply from its 2021 high of 142.33 and now trades below $5.
Conclusion
The stock market faced intense pressure Wednesday, driven by rising bond yields, political uncertainty, and disappointing corporate earnings. Gold stocks and Alphabet’s AI advancements stood out as rare bright spots, while major players like Nvidia, Tesla, and Target struggled to gain traction.
