Dow sinks sharply as Wall Street gears up for possibility of a Trump victory
CNN
US stocks took a dive Wednesday as mounting concerns over big tech earnings, rising Treasury yields and political uncertainty drove down all three major indexes.
US stocks took a dive Wednesday as mounting concerns over big tech earnings, rising Treasury yields and political uncertainty drove down all three major indexes. Investors have been increasingly on edge about the prospect of former President Donald Trump winning the election, a possibility for which Wall Street has been preparing to a greater extent. While polls remain effectively dead-even, Trump’s prospects have grown since the start of this month in political betting markets. “The logic here is very simple: Candidate Trump has called for a significant increase in import tariffs to revive domestic manufacturing,” Steven Ricchiuto, chief US economist at Mizuho Securities, said in a Wednesday afternoon note. “These tariffs are seen as immediately raising the price of consumer goods and, in the process, reversing the goods deflation that has helped pull inflation back towards the Fed’s 2% target.” Trump’s policy proposals, if enacted, are also expected to cause the government to borrow significantly more money compared to Vice President Kamala Harris’ policy plans. That would make it riskier to invest in government-issued securities, leading investors to demand higher interest rates to hold US debt. Treasury yields continued their upward march, with the 10-year note briefly topping 4.25%, its highest level since July. This surge in yields has put additional pressure on stocks. That rise in bond yields made stock investors nervous. The tech-heavy Nasdaq Composite led the decline, plunging 1.8%; while the S&P 500 and Dow both fell 1.1%. For the Dow, this translated to a drop of 450 points. At one point early Wednesday, the Dow was down more than 600 points, marking the third consecutive day of losses for US markets. All three indexes settled slightly lower later Wednesday afternoon.