US Indices Today: VIX Jumps as Dow Drops 700 Points on Fiscal Worries and Yield Surge

Dow Drops 700 Points as Rising Treasury Yields Rattle Equities

Stocks sharply retreated Wednesday, with the Dow Jones Industrial Average plunging over 700 points as bond yields surged and investor concerns mounted over fiscal policy risks tied to a proposed U.S. tax bill. The benchmark 10-year Treasury yield climbed to 4.59%, while the 30-year pushed past 5.08%, levels last exceeded after Moody’s downgraded U.S. debt last week.

The bond market’s move reflected skepticism that the proposed budget, aimed at tax cuts, would do little to reduce the national deficit. Investors fear that a looser fiscal stance could fuel inflation pressures, triggering further upward pressure on yields. Sam Stovall of CFRA noted that while the pace of debt growth might slow, the bill likely won’t address deeper debt issues—contributing to the recent yield spike.

What Role Are Higher Treasury Yields Playing in Stock Market Stress?

Rising yields, which reduce the appeal of equities relative to fixed income, put pressure on major indexes. The S&P 500 dropped after ending a six-day winning streak, while the Nasdaq recorded its first down day in three.

Key technology names like Apple and Amazon slipped alongside interest-rate sensitive sectors. UnitedHealth was the Dow’s worst performer, tumbling over 5% after a downgrade from HSBC.

Despite the pullback, the S&P 500 and Nasdaq are still up 14% and 19% respectively over the past month, as markets had rebounded from tariff-related fears. But that sharp run-up left some investors cautious, prompting calls for a consolidation phase as valuations stretched.

Which Stocks Bucked the Sell-Off and Hit New Highs?

While the broader market retreated, eight S&P 500 names hit all-time highs. Notables included Netflix, Monster Beverage, and GE Vernova. Nvidia also continued its strong momentum, pushing its market cap to $3.35 trillion—just $50 billion shy of overtaking Microsoft as the world’s most valuable company. Nvidia has surged nearly 42% in the past month, compared to Microsoft’s 27%.

Which Stocks Moved the Most Midday?

Target fell 4% after missing Q1 estimates and trimming its full-year forecast. In contrast, Toll Brothers gained 2.8% on better-than-expected earnings and revenue. Canada Goose soared 28% on strong quarterly results, though it withheld 2026 guidance. Xpeng surged over 11% after a narrower-than-expected loss and robust delivery guidance. Palo Alto Networks and Carter’s both dropped sharply on margin concerns and dividend cuts, respectively.

Market Outlook: Will Volatility Stay Elevated?

UBS warned traders to brace for sustained volatility, citing uncertainty around U.S. fiscal policy, trade tensions, and the Federal Reserve’s next move. With Treasury yields still rising and inflation not fully under control, equity markets may face more turbulence. Traders will watch for further developments on the budget bill and any Fed commentary for direction.

More Information in our Economic Calendar.