Rising yields across Treasury maturities suggest investors, traders and speculators have turned their attention from tariffs to taxes and the tenuous fiscal condition of the U.S. government.
Once again, stocks opened lower then straggled higher despite mixed earnings and guidance from major retailers. Late-session trading showed that, ultimately, the bond market is the boss right now.
The 30-year Treasury bond and the 2-year Treasury note both crossed psychologically significant thresholds early Wednesday – the long issue above 5%, the short above 4% – auguring another gap-down for equities.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The yield on the 10-year U.S. Treasury note, meanwhile, got as high as 4.549% in the pre-market from 4.481% on Tuesday.
At 1 am Eastern Standard Time today, the House Rules Committee opened debate on President Donald Trump's One Big Beautiful Bill Act – legislation that could add an estimated $3.3 trillion to the federal deficit over the next 10 years.
Moody’s cut its rating on U.S. government debt from Aaa to Aa1 last Friday, noting that it didn't expect Congress to pass legislation with meaningful spending or deficit reduction.
For every $7 the U.S. spends, almost $1 now goes toward interest costs – more than the defense budget.
President Trump has said he wants to sign his tax bill on July 4.
As Louis Navellier of Navellier & Associates put it, "Higher interest rates are becoming a concern."
They're "moving in the wrong direction despite the clear current trend of low inflation along with low unemployment," Navellier observes. "Further movement higher on interest rates will likely be problematic."
By the closing bell, the blue-chip Dow Jones Industrial Average was down 1.9% to 41,860, the broad-based S&P 500 Index had fallen 1.6% to 5,844, and the tech-heavy Nasdaq Composite was off 1.4% to 18,872.
Big-box retailers report
Target (TGT) missed FactSet-compiled consensus estimates for its fiscal 2025 first-quarter revenue and earnings and also offered disappointing full-year guidance as the retail stock dropped 5.2% Wednesday.
Revenue declined 2.8% year over year to $23.8 billion vs a $24.2 billion forecast, while earnings of $1.30 per share missed an estimate of $1.61.
Management now says EPS for the full fiscal year will be "approximately $7.00 to $9.00," down from a prior range of $8.80 to $9.90 and below a Wall Street midpoint of $8.34, on "a low-single-digit decline in sales."
During Target's conference call, Chief Financial Officer Jim Lee cited the impact of tariffs and softer consumer spending for the guidance revision.
"We're not satisfied with current performance and know we have opportunities to deliver faster progress on our roadmap for growth," said CEO Brian Cornell in a statement announcing Target's results.
Cornell noted that management has established a "multi-year acceleration office" as well as several leadership changes "intended to build more speed and agility" into Target's operations.
Lowe's (LOW), meanwhile, reported EPS of $2.92 on revenue of $20.9 billion vs Wall Street estimates of $2.88 and $20.9 billion.
CEO Marvin Ellison noted near-term uncertainty and housing market headwinds" in a statement, but management of the consumer discretionary stock reiterated guidance for 2025.
Lowe's expects full-year EPS of $12.15 to $12.40 a share and same-store sales growth of 0% to 1% vs Wall Street estimates of $12.21 and 0.5%.
LOW stock was down 1.8%.
GOOGL gets an AI bounce
Alphabet (GOOGL) stock was down 1.5% Tuesday, the day of its Google I/O development conference, but climbed 2.8% Wednesday after Wall Street analysts had time to digest new artificial intelligence features.
CEO Sundar Pichai introduced an "AI Mode" chatbot for Google's search engine that became available to U.S. users today. Pichai also teased Google Beam, a "new AI-first video communications platform."
Other new features include Veo 3, Google's take on the next generation of AI video generation. And management rolled out an "AI Ultra" subscription plan with the "highest usage limits" billed at $249.99 per month.
"We believe these enhancements will resonate with users and attract advertisers through higher quality leads and improved monetization potential," wrote CFRA Research analyst Angelo Zino in a Wednesday note.
KeyBanc analyst Justin Patterson said Google I/O "reoriented investors back to first principles, i.e., AI success requires a combination of engineering, infrastructure, and distribution," emphasizing that "Alphabet is well positioned across these areas."
UNH anchors the Dow again
UnitedHealth Group (UNH) was the worst-performing Dow Jones stock once more Wednesday, falling 5.8% on a report the health care company paid nursing homes to reduce hospital transfers.
According to The Guardian, UnitedHealth distributed secret bonuses "to help slash hospital transfers for ailing residents" as "part of a series of cost-cutting tactics that has saved the company millions, but at times risked residents' health."
UNH stock has lost 36.2% so far in 2025 and is down 52% from its November 11 52-week high of $630.73. CEO Andrew Witty abruptly resigned on May 13, catalyzing a 17.8% decline for UNH.
On May 15, UNH was down 11% after The Wall Street Journal reported the Department of Justice is investigating fraud in the company's Medicare Advantage business.
Related content
- Is the Stock Market Open on Memorial Day in 2025?
- What’s Up With the 10-Year Treasury Bond: Four Financial Experts Weigh In
- Hot Upcoming IPOs to Watch
-
Seven Gorgeous Train Trips to Enjoy Fall FoliageSee fall's best colors from the rails. We've rounded up a range of short and longer train trips across the country that are ideal for older travelers.
-
I'm 63 with an aging house that needs repairs, but I might eventually move to a retirement community. Is it worth making those fixes?We ask financial experts for advice.
-
The 'Ted Lasso' Effect: A Positive Outlook Really Can Strengthen Your Retirement PlanOptimism like that of the fictional soccer coach can surprisingly improve your retirement planning by encouraging better saving habits and a more positive outlook on your financial future.
-
Your Golden Years Just Got a Tax Break, But There's a CatchDon't fall for the 'tax-free Social Security' headlines. The OBBB offers a temporary tax deduction for certain retirees, which is different from eliminating taxes on benefits entirely — and it doesn't solve Social Security's long-term funding issues.
-
I'm a Retirement Coach: Eight Surprising Signs You're Ready to RetireYou've met your savings goal, your friends are having fun without you, your boss is mean to you, and your kids are grown and gone. What are you waiting for?
-
'Work Forever' Is Not a Retirement Plan: What Needs to Change for Gen Z, From a Financial ProSaving for retirement isn't what it used to be. The deck is stacked against Gen Z in some crucial ways. The system is broken, and we need to fix it.
-
Trump-Xi Talks Boost Stocks to New Highs: Stock Market TodayInvestors, traders and speculators finish a dramatic week in a risk-on mood.
-
I'm 55 With 10 Years Until Retirement and I've Made $2 Million on Nvidia Stock. What Do I Do With It Now?What do you do with all that appreciated Nvidia stock? We asked a financial expert for advice.
-
The Best Bank Stocks to BuyBank stocks are part of the financial services sector and are a way to gain exposure to the broader economy. Here, we look at how you can find the best ones.
-
I'm a Financial Planner: These Three Things Are Missing From Almost Every Financial 'Plan' I SeeA financial plan should be a detailed road map to a worry-free retirement. Watch out: If your plan has these common holes, you could be headed for a dead end.
