S&P Clicks Higher as Investors Shrug off Rate Fears
Stocks rose slightly Thursday, as investors tried to shake off fears of rising rates and worries about a ballooning U.S. deficit. The 30-year Treasury yield hit its highest since October 2023 as lawmakers passed a bill that investors fear could worsen the U.S. deficit.
The Dow Jones Industrials inched up 10.61 points to 41,871.05
The S&P 500 edged up 8.09 points to 5,852.70.
The NASDAQ Composite recovered 123.85 points to 18,996.49.
Tech giants led the way higher. Alphabet popped more than 4%, while Nvidia and Microsoft climbed more than 1% each. Tesla gained more than 1% as well.
The major averages rose after S&P Global data showed stronger-than-expected activity in both the services and manufacturing U.S. sectors.
In a party line vote early Thursday, House members approved the bill that includes lower taxes and additional military spending. The bill — which now goes to the Senate — could increase the U.S. government’s debt by trillions and raise the deficit at a time when fears of a flare-up in inflation due to Trump tariffs are already weighing on bond prices and boosting yields. The Congressional Budget Office puts the price tag for bill at nearly $4 trillion.
Long-dated bonds sold off as traders worried a new budget bill would worsen the U.S. deficit. The measure is expected to pass as lawmakers reach a compromise on state and local tax deductions heading into Speaker Mike Johnson’s Memorial Day deadline. Yields spiked even higher after a poor afternoon auction for 20-year debt, raising fears investors may be losing their appetite for funding America’s deficits.
Target shares dropped 5.2% after the big box retailer cut its full-year sales outlook, with executives citing tariff uncertainty and a backlash to the company’s pullback in diversity, equity and inclusion efforts.
UnitedHealth was the worst-performing Dow member, losing 5.8% following a downgrade from HSBC. Major tech-related stocks Apple and Amazon also dropped as rates increased.
Wednesday’s action comes after a tough session for the three major averages. The S&P 500 ended a six-day win streak, while the NASDAQ saw its first negative day in three.
The latest moves come as traders look to Washington as Republican leaders work to finalize a budget bill that would lower taxes.
However, the measure has faced pressure from GOP members looking for higher deductions on state and local taxes. Investors also worry the measure could worsen the U.S. deficit.
Prices for the 10-year Treasury were unchanged Thursday, keeping yields at Wednesday’s 4.6%.
Oil prices lurched lower 91 cents to $60.66 U.S. a barrel.
Prices for gold faded $22.30 to $3,291.20.
