Market Turbulence: U.S. Stocks Plunge Amid Rising Treasury Yields and Fed Rate Concerns

U.S. stocks tumbled on Wednesday, driven by soaring Treasury yields and uncertainties regarding the Federal Reserve's interest rate cuts. The Dow hit its lowest in almost a month, with utilities leading declines in the S&P 500. Hawkish central bank comments and sticky inflation have curbed earlier rate cut expectations.

U.S. stocks fell on Wednesday amid further gains in Treasury yields and concern over the timing and scale of possible interest rate cuts from the Federal Reserve. The Dow fell to its lowest level in nearly a month, while rate-sensitive utilities were among S&P 500 sectors with the biggest declines.

The yield on the benchmark 10-year U.S. Treasury note hit four-week highs at 4.6%, extending Tuesday's gains, after weak debt auctions. "Today's stock market action is primarily about what's going on in the fixed income space, with yields pushing higher... It's consistent with when this has happened a few times - as rate expectations have been repriced, it causes some indigestion in the stock market temporarily," said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.

Conflicting expectations on the size and the timing of interest rates have kept the market on edge since the start of this year. Sticky inflation and hawkish comments from central bankers have forced traders to temper down rate cut expectations to only one by November or December, per the CME FedWatch Tool, from multiple cuts expected at the start of the year.

Stocks held their losses following the release of a U.S. Fed survey. It showed U.S. economic activity continued to expand from early April through mid-May but firms grew more pessimistic about the future while inflation increased at a modest pace. The main focus this week will be on Friday's release of April's Personal Consumption Expenditure data - the Fed's preferred inflation gauge.

The Dow Jones Industrial Average fell 402.30 points, or 1.04%, to 38,450.56, the S&P 500 lost 33.79 points, or 0.64%, to 5,272.25 and the Nasdaq Composite lost 71.14 points, or 0.42%, to 16,948.74. The Nasdaq retreated after closing above the 17,000 mark for the first time on Tuesday, while the small-caps Russell 2000 index was down 1.4%.

Marathon Oil advanced 7.7% after ConocoPhillips said it would buy the company in an all-stock deal for a little over its $15 billion market value. ConocoPhillips lost 4%, dropping to the bottom of the energy sector that lost 1.3%. Airline stocks fell, led by American Airlines, which declined 14.7% after the company cut its second-quarter profit forecast.

Dick's Sporting Goods jumped 15.2% after lifting forecasts for annual sales and profit, while Abercrombie & Fitch rose 23.7% on raised annual sales growth forecast. Salesforce and HP Inc are set to report quarterly results after the close.

Declining issues outnumbered advancers by a 5.85-to-1 ratio on the NYSE and by a 2.74-to-1 ratio on the Nasdaq. The S&P 500 posted seven new 52-week highs and 15 new lows, while the Nasdaq Composite recorded 42 new highs and 130 new lows.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)