Wall Street: Dow Jones Drops Over 800 Points Amid Budget Deficit Concerns

Stocks plunged today (May 21, 2025) as yields on government bonds surged, with traders concerned that a new budget bill could further burden the U.S. deficit. The industrial index Dow Jones lost 817 points or 1.9%, while the S&P 500 fell by 1.6% and the Nasdaq slid by 1.2% on Wall Street. The yield on the 30-year U.S. Treasury bond traded at around 5.08%, its highest level since October 2023. The yield on the benchmark 10-year Treasury note traded at 4.59%. Long-duration bonds dropped as traders worried that the new budget bill would worsen the U.S. deficit. The measure is expected to pass as lawmakers reach a compromise on tax cuts at the state and local levels ahead of President Mike Johnson’s Memorial Day deadline. Yields rose further after a poor morning auction for 20-year debt, increasing fears that investors might lose interest in financing U.S. deficits. Bond yields had surged last month amid concerns over President Donald Trump’s tariffs, which hit confidence in the safe-haven status of U.S. debt. The 10-year yield swung from below 3.9% to over 4.5% within days in April. Yields eased from those levels after Trump announced delays regarding when the levies would take effect. Target shares fell more than 4% after the retail giant lowered its sales outlook for the year, citing tariff uncertainty and backlash against its diversity, equality, and inclusion efforts. UnitedHealth was the worst-performing Dow member, losing over 5% following a downgrade from HSBC. Major tech-related stocks like Apple and Amazon also declined as interest rates rose. The S&P 500 ended a six-day winning streak, while the Nasdaq saw its first negative day after three.