Source: Sharecast
The Dow dropped 1.9%, while the S&P 500 fell 1.6% and the Nasdaq slumped 1.4%.
The US Treasury saw softer-than-expected demand in a $16bn auction of 20-year bonds on Wednesday at yields of 5.047%, up from 4.810% the last auction. This was the highest coupon rate for a 20-year bond since 2020 when the maturity was reintroduced.
The weak auction comes amid mounting fears about the US government deficit with massive tax cuts put forward by president Donald Trump unlikely to help matters. Meanwhile, last Friday's decision by Moody's to cut the US credit rating from the highest rating Aaa to Aa1 was also weighing on sentiment.
The auction saw 10-year US Treasury yields rise 10.7 basis points to 4.598% by the close of play on Wall Street, hitting levels not seen since January, while the 30-year bond yield rose as high as 5.099%, reaching highs not seen since 2023.
"Let’s be clear: this wasn’t some garden-variety supply indigestion. This was a market flashing red on fiscal credibility, with the debt downgrade gumbo still simmering in the background," said Stephen Innes, managing partner at SPI Asset Management.
"The Moody’s cut may not have shocked the tape initially, but the bond vigilantes are starting to stir, and this weak auction added fuel to that fire."
Also weighing on stocks were fears about an escalation of conflict in the Middle East on reports that Israel is looking to attack Iran's nuclear sites, while hopes for a ceasefire between Ukraine and Russia remain up in the air.
The only major economic data release of the day was from the Mortgage Bankers Association, which reported that mortgage applications in the US slumped last week as the average long-term mortgage rate hit its highest in three months. The MBA's Market Composite Index showed that applications fell 5.1% in the week ended 16 May, following a 1.1% increase the previous month, making the first decline in three weeks.
Market movers
Target fell sharply after cutting its full-year guidance on Wednesday as the US retail giant missed first-quarter forecasts. The big box retailer said net sales fell 2.8% in three months to 3 May to $23.85bn, below the $24.27bn Wall Street was expecting.
Brian Cornell, chief executive, said the trading environment during the first quarter had been "highly challenging". He blamed Target's performance on weakened consumer sentiment and the impact of Donald Trump’s tariff regime.
DIY retailer Lowe's managed to beat profit expectations, but that didn't stop the stock from falling, with same-store sales down 1.7% in the first quarter. First-quarter revenues totalled $20.93bn, coming in slightly shy of the $20.97bn expected.
Another retailer under pressure was VF Corp as the Vans and North Face parent company missed forecasts with its sales outlook.
Dow Jones - Risers
Coca-Cola Co. (KO) $71.85 0.22%
Dowdupont Inc. (DWDP) $0.00 0.00%
Procter & Gamble Co. (PG) $165.43 -0.13%
Johnson & Johnson (JNJ) $153.18 -0.31%
Cisco Systems Inc. (CSCO) $63.20 -0.35%
Walgreens Boots Alliance, Inc. (WBA) $11.18 -0.45%
Travelers Company Inc. (TRV) $271.15 -0.94%
McDonald's Corp. (MCD) $316.44 -1.05%
Verizon Communications Inc. (VZ) $43.75 -1.06%
Microsoft Corp. (MSFT) $452.57 -1.22%
Dow Jones - Fallers
Unitedhealth Group Inc. (UNH) $302.98 -5.78%
Nike Inc. (NKE) $59.98 -4.12%
Dow Chemical Co. (DOW) $28.75 -3.49%
American Express Co. (AXP) $286.00 -3.43%
3M Co. (MMM) $149.40 -3.08%
Intel Corp. (INTC) $20.69 -2.73%
Visa Inc. (V) $358.30 -2.33%
Apple Inc. (AAPL) $202.09 -2.31%
International Business Machines Corporation (CDI) (IBM) $260.87 -2.28%
Goldman Sachs Group Inc. (GS) $593.46 -2.15%
S&P 500 - Risers
Alphabet Inc. Class C (GOOG) $170.06 2.87%
Alphabet Inc. Class A (GOOGL) $168.56 2.79%
CF Industries Holdings Inc. (CF) $89.35 1.63%
CME Group Inc. (CME) $281.74 1.39%
Motorola Solutions Inc (MSI) $426.44 0.83%
L3Harris Technologies Inc. (LHX) $232.59 0.77%
Newmont Corporation (NEM) $52.64 0.65%
Corning Inc. (GLW) $48.18 0.42%
Philip Morris International Inc. (PM) $174.64 0.30%
H&R Block Inc. (HRB) $58.17 0.28%
S&P 500 - Fallers
VF Corp. (VFC) $12.15 -15.80%
AES Corp. (AES) $10.13 -9.88%
Advance Auto Parts (AAP) $31.31 -8.34%
Nektar Therapeutics (NKTR) $0.63 -7.95%
Phillips 66 Common Stock (PSX) $111.78 -7.54%
TripAdvisor Inc. (TRIP) $13.54 -7.32%
Bath & Body Works, Inc. (BBWI) $31.17 -6.84%
Equifax Inc. (EFX) $258.52 -6.68%
Kohls Corp. (KSS) $7.81 -5.90%
Whirlpool Corp. (WHR) $77.20 -5.88%
Nasdaq 100 - Risers
Alphabet Inc. Class C (GOOG) $170.06 2.87%
Alphabet Inc. Class A (GOOGL) $168.56 2.79%
Mercadolibre Inc. (MELI) $2,601.97 0.88%
Vodafone Group Plc ADS (VOD) $10.42 0.29%
Netflix Inc. (NFLX) $1,194.63 0.22%
Monster Beverage Corp (MNST) $63.10 0.17%
Check Point Software Technologies Ltd. (CHKP) $220.95 0.01%
Dish Network Corp. (DISH) $5.77 0.00%
Alexion Pharmaceuticals Inc. (ALXN) $0.00 0.00%
Xilinx Inc. (XLNX) $0.00 0.00%
Nasdaq 100 - Fallers
Align Technology Inc. (ALGN) $171.91 -5.84%
Illumina Inc. (ILMN) $79.37 -5.75%
DENTSPLY Sirona Inc. (XRAY) $15.83 -5.27%
Kraft Heinz Co. (KHC) $26.63 -4.55%
Take-Two Interactive Software Inc. (TTWO) $226.76 -4.52%
Qvc Group Inc Series A (QVCGA) $0.10 -4.33%
Baidu Inc. (BIDU) $85.48 -4.32%
J.B. Hunt Transport Services Inc. (JBHT) $139.37 -3.90%
American Airlines Group (AAL) $11.24 -3.52%
Idexx Laboratories Inc. (IDXX) $500.87 -3.15%
