Major stock indexes fell sharply on Wednesday as Treasury yields continued their ascent and corporate earnings results came in mixed.
The Dow Jones Industrial Average dropped 332 points, or nearly 1%, finishing below 33,700. The S&P 500 index declined 1.3% to 4,315, while the tech-heavy Nasdaq Composite slid 1.6% to 13,315.
Behind the broad market declines was a surge in bond yields, with the 10-year Treasury note yield topping 4.9% for the first time since 2007. Mortgage rates also marched higher, with the average 30-year fixed rate hitting 8% for the first time in over 20 years.
“Markets are grappling with where rates might peak,” said Jamie Cox of Harris Financial. “There is uncertainty around what happens when yields hit 5%.”
The moves came as earnings season kicked into high gear. Results from some major companies disappointed, dragging down their shares. Trucking giant J.B. Hunt plunged nearly 9% following weaker than expected quarterly profits. United Airlines dropped almost 10% after issuing soft guidance.
However, other corporate reports beat analyst estimates. Consumer products leader Procter & Gamble gained 2.6% after reporting better than projected earnings.
“Investors are focused on revenue growth this season,” said Charles Schwab’s Kevin Gordon. “Markets want to see real demand, not just cost-cutting boosting earnings.”
Ongoing geopolitical tensions added to the risk-off environment. President Biden visited Israel on Wednesday, demonstrating support amid conflict between Israel and Hamas.
With about 10% of S&P 500 companies having reported, most are exceeding forecasts so far. But analysts say it’s unclear whether those beats are driven by solid demand or cost reductions. Markets face continued volatility as more results arrive and yields keep climbing.
