A swift jump in Treasury yields rattled Wall Street Wednesday, weighing down stock indexes at the start of another month in what’s been a turbulent year. The S&P 500 fell 0.7% after an early morning gain quickly vanished. Stocks began their slide immediately after the release of several reports on the US economy, including one showing manufacturing growth was stronger last month than expected. That bolstered investors’ expectations for the Federal Reserve to continue raising interest rates aggressively to slow the economy in hopes of reining in inflation, the AP reports. The S&P 500 fell 30.92 points to 4,101.23. The Dow gave up 176.89 points to 32,813.23, after losing an early gain of 282 points. The Nasdaq composite slid 86.93 points to 11,994.46.
Treasury yields rose sharply, sending the yield on the 10-year note up to 2.92%. A separate report said that the number of job openings across the economy ticked a bit lower in April but remains much higher, at 11.4 million, than the number of unemployed people. Wall Street is worried that too-aggressive rate hikes by the Fed may force the economy into a recession. Even if it can avoid choking off the economy, higher rates put downward pressure on stocks and other investments regardless.
The Fed has signaled it may continue raising its key short-term interest rate by double the usual amount at upcoming meetings. Wednesday also marked the start of the Fed’s program to pare back some of the trillions of dollars of Treasurys and other bonds that it amassed through the pandemic. Such a move should put upward pressure on longer-term rates. Airlines and stocks of other travel-related companies were some of Wednesday's biggest losers on Wall Street amid worries that inflation is slicing away their earnings. Delta’s stock fell 5.2% after it said it expects to see fuel costs of $3.60 to $3.70 per gallon this quarter, up from its prior forecast of up to $3.35.
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