Stocks Close Mixed as U.S. Government Debt Worries Persist
NEW YORK (AP) — Stock prices showed mixed movements at the close of trading on Wall Street on Thursday, following an unsettled week largely due to
worries
emerging from the bond market regarding the increasing national debt of the U.S. government.
The trading activity stayed erratic for much of the day afterward.
Wednesday’s big slump
For the S&P 500, this decline has positioned the benchmark index for its poorest performance over the past seven weeks.
The S&P 500 dropped 2.60 points, which is under 0.1%, closing at 5,842.01. The Dow Jones IndustrialAverage declined by just 1.35 points, also less than 0.1%, ending up at 41,859.09. Meanwhile, theNasdaq composite climbed 53.09 points, equivalent to about 0.3%, finishing at 18,925.73.
Tech stocks played a crucial role in bolstering the overall market. Although most stocks in the S&P 500 declined, significant gains from high-value tech firms counterbalanced these losses. Alphabet, which owns Google, surged by 1.4%, and Nvidia climbed by 0.8%.
This week’s volatile trading and the significant drop in stock prices on Wednesday follow multiple weeks of predominantly positive trends that had pushed the S&P 500 to be just 5% below its record peak.
“We have experienced a solid recovery, but the market seems ready to find an opportunity to cash out,” stated Scott Wren, who serves as a senior global market strategist at Wells Fargo Investment Institute.
Yields in the Treasury market remained relatively stable, though they had fluctuated earlier in the day following actions in the House of Representatives.
approved a bill
That would reduce taxes and might
add trillions
to the U.S. debt. The bond market has served as
hub of Wall Street’s activity
this week. Yields have been broadly on the rise in part because of worries about the U.S. government’s spiraling debt.
In addition to increasing the cost for the U.S. government when borrowing money to cover expenses, elevated Treasury yields can spread through the broader economy, making it harder for American families and companies to obtain financing. Increased yields may also deter investors from bidding up stock prices and purchasing other types of assets.
The 10-year Treasury yield surged to 4.63% just prior to the opening of the U.S. stock market but then dropped back to 4.54%. By late Wednesday, it had settled at 4.58%, down from an initial level of 4.01% earlier in the month. Meanwhile, the two-year yield, which typically reflects forecasts regarding Fed actions, decreased slightly from 4.02% to 3.99% towards the end of Wednesday.
The House’s
multitrillion-dollar
The spending bill, designed to prolong approximately $4.5 trillion worth of tax cuts implemented during President Donald Trump’s initial term and introduce additional measures, is anticipated to face revisions once it reaches the Senate for voting.
The new law accelerates the phase-out of production tax credits for clean energy initiatives, causing solar stocks to plummet. Shares of Sunrun decreased by 37.1%, Enphase Energy declined by 19.6%, and First Solar lost 4.3%.
Healthcare shares dropped on Thursday following an announcement from the Centers for Medicare & Medicaid Services about increased audits of Medicare Advantage programs. Shares of UnitedHealth Group declined by 2.1%, and Humana saw a drop of 7.6%.
Several economic updates were released on Wall Street on Thursday.
The number of U.S. citizens submitting applications for
unemployment claims
Last week decreased marginally. The overall job market remains stable.
remained strong
, although companies continue to be concerned about the financial instability due to the trade conflict.
Earlier in the day, the market had shown an uptick due to a more favorable than anticipated report on manufacturing and service sectors in the United States. According to the survey conducted by S&P Global, both these segments experienced expansion in May after experiencing a slow period in April.
“Business confidence increased in May compared to the concerning downturn observed in April, as pessimism regarding the outlook for the coming year diminished partly due to the halt in escalated tariff rates,” stated Chris Williamson, chief business economist at S&P Global Market Intelligence.
The report likewise highlighted how the trade war affected supply chains, pricing, and worries regarding future economic conditions. A significant boost came from new business orders; however, this largely stemmed from companies attempting to circumvent potential substantial tariff increases scheduled to affect the economy in July.
” worries about tariffs causing supply shortages and increasing prices resulted in the biggest buildup of raw materials inventory ever documented since the surveys started 18 years ago,” Williamson stated.
A 90-day suspension of certain significant tariffs imposed by President Donald Trump provided some respite for businesses and consumers. These entities are already struggling with extensive tariffs and the resulting price increases for various products sourced from trading partners globally, such as China, Canada, and Mexico.
According to the S&P Global report, the general increase in costs for products and services in May was the most significant since August 2022.
Companies have been alerting shareholders about increased expenses due to tariffs, leading numerous firms to reduce or retract their financial predictions. Several businesses, such as retail behemoth Walmart, have likewise cautioned customers that prices may be affected.
raising prices
across various products due to increased tariffs on imports.
In foreign stock markets, indices declined throughout Europe and Asia. The French CAC 40 decreased by 0.6%, the Hong KongHang Seng Index plummeted by 1.2%, and the South KoreanKospi lost 1.2%, marking some of the more significant drops.
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AP Business Writers Stan Choe, Matt Ott, and Yuri Kageyama provided contributions.
Damian J. Troise, The Associated Press