Market Turmoil: Wall Street Dips as Treasury Yields Surge

Wall Street faced a turbulent session on Wednesday as U.S. stocks closed sharply lower, influenced by a surge in Treasury yields and heightened concerns over a potential increase in federal debt due to President Trump's proposed tax-cut bill. All major Wall Street indexes marked their most significant daily losses in over a month, with small cap stocks similarly plummeting, evidenced by the Russell 2000 index's steep decline since April 10.

Investor demand was slack for the Treasury Department's $16 billion sale of 20-year bonds, causing longer-dated Treasury yields to rise. The notable spike saw the yield on benchmark 10-year notes rise by 10.8 basis points to 4.589%, the highest since mid-February. In addition, Republicans faced internal challenges over proposed budget cuts, specifically targeting Medicaid, leading to an unusual Congressional hearing set to discuss the matter.

Economic analysts suggested the Republican tax plan might substantially add to the federal debt, potentially increasing it from $3 trillion to $5 trillion. Despite the unsettling developments, some market experts, like Michael Farr, CEO of Farr, Miller & Washington, remained optimistic, suggesting that market threats often dissipate quickly, interpreted either as negotiating strategies or actual fiscal changes.

(With inputs from agencies.)