The Nasdaq Composite fell 1.2% on Wednesday, a day after closing at a record, as Treasury yields jumped following hot purchasing managers' index data. Fed Governor Michael Barr said further rate increases are likely needed, and odds of an October hike climbed above 68%.
The Nasdaq Composite shed 1.2% on Wednesday, retreating from the record close it notched a day earlier. The S&P 500 dropped 0.7%, while the Dow Jones Industrial Average fell 318 points, or 0.6%.
Yields jump to a 19-year high
Treasury yields marched higher after the latest purchasing managers' index readings came in hot. The 10-year Treasury yield reached 5.135%, its highest level since July 2007, and posted its biggest one-day move since April 7, 2025. The 2-year Treasury yield hit 4.947%, its highest since May 2024.
Utilities, consumer discretionary and communication services led the market's decline, with all three sectors shedding more than 1% each.
Fed's Barr flags more rate hikes
Fed Governor Michael Barr said Wednesday: "further policy adjustments are likely to be needed" to get inflation under control.
Barr said economic growth remains strong and the labor market solid, but inflation is above the Fed's 2% target and not clearly trending toward that target in a timely way. He added that risks to the inflation target have increased while risks to the labor market have receded.
Odds of a quarter-point rate hike in October stood above 68% following the developments, according to the CME FedWatch tool. That is up from 55.4% a day earlier and just 8.8% a month ago.
Tuesday's record run reverses
In Tuesday's session, the Nasdaq hit a new all-time intraday high and closed at a record, while the Dow finished lower. The S&P 500 was roughly flat, though the index remained about 0.8% off its all-time high.
Crude oil futures moved up as well on Wednesday. Brent crude futures traded 3% higher at around $102 a barrel, while U.S. West Texas Intermediate crude futures rose 1% to around $91 per barrel.
Source: CNBC
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