U.S. stocks closed sharply lower Wednesday as Treasury yields spiked on worries that government debt would swell by trillions of dollars if Congress passes U.S. President Donald Trump's proposed tax-cut bill.
Alert: Wall Street Elites Are Running for Cover... See Reason Here
All three major Wall Street indexes closed with their biggest daily losses in a month. Small cap stocks also fell sharply, with the Russell 2000 index posting its biggest daily loss since April 10.
Longer-dated Treasury yields rose after soft demand from investors in a $16 billion sale of 20-year bonds by the Treasury Department. The yield on benchmark U.S. 10-year notes rose 11.5 basis points to 4.597%. During the session, the 10-year yield hit its highest since mid-February.
A Congressional committee set an unusual hearing as House Republicans sought to overcome internal divisions about proposed budget cuts, including to the Medicaid health program.
Nonpartisan analysts said the Republican bill could add between $3 trillion and $5 trillion to the federal government's $36.2 trillion debt.
"There are any number of headlines, all of which have consequences if indeed they come to pass," said Michael Farr, chief executive officer at investment advisory firm Farr, Miller & Washington in Washington. "Many of these things are threats that fade rather quickly and markets are trying to digest what's important or what's material or what's perhaps negotiating bluster on behalf of the administration."
Urgent: Warren Buffett's Warning Signal Hits the Highest Level in History... Read More Here
According to preliminary data, the S&P 500 lost 96.25 points, or 1.62%, to end at 5,843.09 points, while the Nasdaq Composite lost 269.49 points, or 1.41%, to 18,873.22. The Dow Jones Industrial Average fell 824.08 points, or 1.92%, to 41,856.74.
Google parent Alphabet rose, while Nvidia, Apple and Tesla fell.
UnitedHealth Group dropped after a Guardian report said the healthcare conglomerate secretly paid nursing homes thousands of dollars in bonuses to help reduce hospital transfers for ailing residents. HSBC downgraded the stock to "reduce" from "hold."
Target fell after slashing its annual forecast due to a pullback in discretionary spending.
Wolfspeed plunged following a report that the semiconductor supplier was preparing to file for bankruptcy within weeks.
Morgan Stanley upgraded its stance on U.S. equities to "overweight," saying the global economy was still expanding, albeit slowly, amid policy uncertainty.