The New York stock market took a nosedive on Wednesday, with all major indices posting significant losses.
This marks the second consecutive day of declines, as a sharp surge in U.S. long-term Treasury yields triggered a market sell-off.
Treasury yields skyrocketed after the U.S. 20-year bond auction failed to attract strong demand, and U.S. President Donald Trump pressured Republicans to pass a budget bill that includes tax cuts.
As a result, the CBOE Volatility Index (VIX), often referred to as Wall Street’s fear gauge, surged past the psychological resistance level of 20.
Second Consecutive Day of Decline
New York stocks fell for a second straight day. The market, which had seen a slight dip yesterday, experienced a significant expansion in losses today.
The Dow Jones Industrial Average plummeted below the 42,000 level. Both the S&P 500 and Nasdaq weakly collapsed below 5,900 and 19,000 respectively.
By the closing bell, the Dow had shed 816.80 points (1.91%) to finish at 41,860.44. The S&P 500 dropped 95.85 points (1.61%) to 5,844.61, while the Nasdaq retreated 270.07 points (1.41%) to 18,872.64.
The VIX skyrocketed by 2.78 points (15.37%) to close at 20.87.
Treasury Yields Soar
Investors fled from U.S. Treasury bonds, particularly long-term securities, causing yields to spike dramatically.
The 30-year U.S. Treasury bond yield, the long-term interest rate benchmark, breached the 5% mark, jumping 0.116 percentage points to 5.083%.
This marks the second time the 5% threshold has been crossed following Monday and the first time the 5% barrier has been broken since October 2023.
The 10-year Treasury yield, a market interest rate benchmark, surged 0.112 percentage points to 4.593%, returning to levels seen on April 3, when markets fluctuated after Trump announced reciprocal tariffs on April 2.
The 2-year yield, closely watched as an indicator of the Federal Reserve’s monetary policy outlook, climbed above 4%, rising 0.047 percentage points to 4.017%.
M7, Only Alphabet Rises
All Magnificent Seven stocks faced a brutal sell-off, with Alphabet being the sole exception.
Nvidia shares tumbled 2.58 USD (1.92%) to 131.80 USD following the news that the White House plans to maintain strict export controls on advanced semiconductors to China.
Tesla stock plunged 9.20 USD (2.68%) to 334.62 USD, despite no specific negative news, largely due to the market’s dampened sentiment caused by surging Treasury yields.
Apple shares also fell 4.77 USD (2.31%) to 202.09 USD, while Microsoft dropped 5.60 USD (1.22%) to close at 452.57 USD.
Amazon declined 2.95 USD (1.45%) to 201.12 USD, and Meta Platforms slipped 1.60 USD (0.25%) to 635.50 USD.
CoreWeave Explodes 19%
AI cloud company CoreWeave saw its stock soar by 17.15 USD (19.00%) to 107.39 USD.
CoreWeave, which has been heavily investing in AI data centers using Nvidia chips, successfully issued 2 billion USD in bonds, leading to the stock surge.
CoreWeave issued 2 billion USD worth of bonds, set to mature in June 2030, at a 9.25% interest rate. This raised 500 million USD more than initially planned.
Investors rallied behind CoreWeave, with optimism that it secured sufficient capital to gain an edge in the AI competition.
On the flip side, semiconductor firm Wolfspeed was severely hit by a Wall Street Journal report that it may file for bankruptcy protection within weeks.
Wolfspeed shares plummeted from 1.85 USD (59.11%) to 1.28 USD.
