Dow Plummets Over 400 Points as Rising Treasury Yields Unsettle Markets

May 30, 2024
Paul Svensen

U.S. stocks took a significant hit on Wednesday, with the Dow Jones Industrial Average dropping over 400 points. The decline was driven by a spike in Treasury yields, which rattled investor confidence and overshadowed recent gains in the stock market. The S&P 500 and Nasdaq Composite also saw notable declines as concerns about interest rates and economic data weighed on sentiment.

Key Takeaways

The Dow Jones Industrial Average fell by over 400 points, or 1.1%.
The S&P 500 and Nasdaq Composite also experienced declines of 0.7% and 0.6%, respectively.
Rising Treasury yields, particularly the 10-year yield, contributed to the market downturn.
Investors are concerned about the Federal Reserve’s interest rate policies and upcoming economic data.

Market Performance

The Dow Jones Industrial Average dropped 411 points, closing at 38,441.54. The S&P 500 fell 0.7% to 5,266.95, while the Nasdaq Composite slipped 0.6% to 16,920.58. This decline comes despite the Nasdaq’s recent record highs, driven by gains in tech stocks like Nvidia.

Treasury Yields Spike

A significant factor in the market’s decline was the rise in Treasury yields. The 10-year Treasury yield climbed to 4.623%, its highest level since April 30. This increase followed a lackluster auction of seven-year Treasury notes, which saw weak demand and contributed to fears of oversupply.

Economic Data and Fed Policies

Investors are closely watching upcoming economic data, including the first-quarter GDP revision and the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index. These data points are crucial for assessing the future path of interest rates. Minneapolis Fed President Neel Kashkari’s recent comments about the possibility of holding rates higher for longer have added to market jitters.

Sector Performance

All 11 major sectors of the S&P 500 ended the day in the red. Energy and Utilities were among the hardest hit, with Energy down nearly 2% and Utilities off by 1.5%. Stocks like American Airlines and ConocoPhillips also saw significant declines due to company-specific news and broader market trends.

Company-Specific News

American Airlines: The airline’s stock fell 13.5% after it cut its profit forecast for the current quarter, citing higher competition and lower revenue expectations.
ConocoPhillips and Marathon Oil: ConocoPhillips announced a $22.5 billion all-stock deal to acquire Marathon Oil. While Marathon Oil shares rose 8.4%, ConocoPhillips fell 3.1%.
Salesforce: The company’s stock tumbled 16% in after-hours trading following a downbeat revenue forecast for the current quarter.

Global Market Reaction

International markets also felt the impact of rising U.S. Treasury yields. Hong Kong’s Hang Seng Index fell 1.8%, and Japan’s Nikkei 225 lost 0.8%. European markets were similarly affected, with the Stoxx Europe 600 declining.

Looking Ahead

The market’s focus will remain on upcoming economic data and Federal Reserve policies. Investors are particularly interested in the PCE inflation data due on Friday, which could provide further insights into the Fed’s next moves. Until then, market volatility is expected to continue as traders digest the latest developments.