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News Topical, Digital Desk : On Wednesday, the US stock market witnessed a big decline. The reason for this was the rise in bond yields and concerns about President Donald Trump's tax cut bill. This bill is currently being discussed in the US House. Let us tell you that this bill is part of the agenda for Donald Trump's second term. On Wednesday, the Dow Jones Industrial Average closed down 817 points or 1.9%. The S&P 500 fell 1.6% and the tech sector Nasdaq fell 1.4%.
Rising bond yields have increased the cost of borrowing in the US, raising concerns among investors about a negative impact on the economy. The 10-year Treasury yield rose from 4.48% to 4.58%, the highest since February.
Debt concerns The Congressional Budget Office said on Tuesday that Trump's tax policies would increase the national debt by $3.8 trillion. The "One Big Beautiful Bill Act" includes an extension of the 2017 Trump tax cut as well as changes to Medicaid and immigration policy. Republican members want to pass it by Memorial Day. Last week, Moody's downgraded America's credit rating, causing a stir in the debt market. Bond prices fell and yields rose as demand for bonds decreased. The yield on long-term Treasury bonds determines the interest rates on loans such as mortgages and credit cards. When interest rates rise, it becomes expensive for companies to borrow. This can stop plans such as office expansion or new recruitment, increasing the risk of a recession in the economy.
3 biggest reasons for the fall in the US market
1. Decline in company shares: Target shares fell 6% as it lowered its full-year earnings forecast. Tesla fell 3% and Apple fell 2%, increasing pressure on the tech sector.
2. Rise in bond yield: The 10-year Treasury yield reached 4.59%, the highest in recent years. This increased investors' fear that high interest rates could harm the economy.
3. Concerns about budget deficit: A large tax and spending bill was being discussed in the US Congress, which raised fears of increasing the government deficit. This shook investors' confidence. Fears of foreign investors losing interest in funding the US deficit increased. This led to instability in the market and investors turned to safe options.
Read More: US Market Crash: Heavy selling seen in US market, these are the 3 biggest reasons for the fall
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