Markets came under pressure on Wednesday as spiking Treasury yields and deficit concerns triggered a sharp sell-off across equities, while bitcoin briefly soared to a new all-time high. The Dow plunged over 800 points, with the S&P 500 and Nasdaq also sliding after a weak 20-year bond auction intensified fears over investor appetite for US debt. Risk assets faced renewed pressure as long-dated yields surged to levels last seen in October 2023. Despite the broader risk-off tone, bitcoin jumped above $109,000 intraday before paring gains, lifted by inflation concerns and renewed interest in alternative stores of value. The day marked a volatile split in sentiment between traditional and digital markets.

Key Takeaways:

  • Dow Suffers Steepest Drop Since March: The Dow Jones Industrial Average plunged 816.80 points, or 1.91%, to 41,860.44 on Wednesday as surging Treasury yields and fiscal concerns triggered a broad-based sell-off, marking the index’s worst day in over two months.
  • S&P 500 Breaks Down After Strong Run: The S&P 500 fell 1.61% to finish at 5,844.61, ending a recent string of strong sessions. Rate-sensitive tech names and consumer stocks led the declines, with investors taking profits after a 13% rally over the past month. 
  • Nasdaq Retreats as Tech Stocks Slide: The Nasdaq Composite dropped 1.41% to 18,872.64, dragged down by losses in Apple, Amazon, and other major tech names. The pullback marked the Nasdaq’s second straight daily loss after a strong multi-week run.
  • Europe Ends Mixed as German Stocks Outperform: European markets closed broadly flat on Wednesday, holding steady despite weakness in US equities. The pan-European Stoxx 600 dipped just 0.04%. Germany’s DAX stood out, rising 0.4% to a record 24,118 as fiscal support measures continued to attract capital. The FTSE 100 in London edged up 0.06% to 8,786.46, while Italy’s FTSE MIB ticked higher by 0.07%. France’s CAC 40 underperformed, slipping 0.4% on weakness in consumer names and some profit-taking. Meanwhile, British inflation unexpectedly rose to 3.5% in April, up from 2.6% in March, driven by sharp increases in utility and water prices. Core inflation also picked up to 3.8%. 
  • Asia Climbs Despite Japan Weakness and Trade Concerns: Most major Asia-Pacific markets finished higher, shrugging off the pause in Wall Street’s rally. South Korea led gains, with the Kospi up 0.91% and the Kosdaq advancing 1.13%. Australia’s ASX 200 added 0.52%, and Hong Kong’s Hang Seng rose 0.62%, with buying in financials and property stocks helping lift sentiment. Mainland China’s CSI 300 gained 0.47%, continuing its recovery despite trade uncertainty. The Bank of Indonesia delivered a surprise rate cut to 5.5%, citing weak Q1 growth and a softening rupiah. Japan’s Nikkei 225 bucked the trend, slipping 0.61% after export growth slowed for a second month. 
  • Oil Falls on Surprise Inventory Builds: Oil prices dipped after the EIA reported unexpected builds in US crude and product inventories ahead of the summer driving season. Brent settled at $64.64, down 1.13%, while WTI dropped to $61.33. Earlier gains tied to Middle East tensions faded as bearish supply data and rising US output weighed. Kazakhstan also defied OPEC+ expectations by increasing production, adding to oversupply concerns.
  • Treasury Yields Spike on Deficit and Auction Fears: Yields surged as investors grew nervous over rising US debt levels and shrinking demand for long-dated bonds. The 30-year yield jumped to 5.08%, while the 10-year climbed to 4.59%. A poor 20-year auction raised alarms about investor appetite for new issuance. Mortgage rates also climbed, with the average 30-year fixed hitting 6.92%, the highest since February, triggering a 5.1% drop in home loan applications.
  • Bitcoin Hits New High Before Paring Gains as Yields Rise: Bitcoin surged as much as 3% intraday to reach a record high of $109,857 on Wednesday before pulling back to settle flat around $106,678. The early move was fuelled by improving macro tailwinds including soft inflation data, easing US-China trade tensions. Traders now look toward volatility around the $110,000 mark, with support seen near $103,000 and stronger demand likely near the prior consolidation zone around $100,000.

FX Today:

  • EUR/USD Extends Rally as Price Approaches Mid-May Resistance: EUR/USD climbed 0.41% to finish at 1.1328, continuing its recovery from earlier May losses and logging its fifth gain in six sessions. Price remains comfortably above the 50-day SMA at 1.1130, which helped contain the last correction, while the 100-day and 200-day SMAs at 1.0789 and 1.0804, respectively, slope upward and reinforce the broader uptrend. The next technical test for bulls lies between 1.1370 and 1.1400, where selling pressure emerged earlier this month. A break above this zone could open the door to a retest of April’s high near 1.1500. On the downside, immediate support is seen around 1.1250, followed by firmer demand near 1.1180 and the 50-day SMA. As long as the pair holds above the 1.1100 region, the trend bias remains bullish.
  • GBP/USD Climbs Toward 1.3450 as Bullish Breakout Gains Traction: GBP/USD edged up 0.24% to close at 1.3425, recording its fourth gain in five sessions as the pair extended its climb toward key resistance. After spending more than a week consolidating between 1.3300 and 1.3400, the pair pushed higher, supported by a steeply rising 50-day SMA at 1.3143. The broader structure remains bullish, with the 100-day and 200-day SMAs at 1.2829 and 1.2882 both sloping upward and well below price. GBP/USD closed just beneath the 1.3450 resistance zone, and a sustained move above that level would open the path toward the March peak near 1.3550, followed by 1.3600 and 1.3660. On the downside, support is seen at 1.3300, followed by the 1.3150 area aligned with the 50-day SMA. 
  • USD/JPY Declines as Bearish Pressure Intensifies: USD/JPY dropped 0.60% to close at 143.62, marking a fifth consecutive session of declines. After repeated failures to hold above 146.00 last week, the pair has slipped through key support levels and continues to trade below all major SMAs. The 50-day SMA at 145.90 has turned downward, aligning with the 100-day and 200-day SMAs at 149.55 and 149.54, confirming a shift in medium-term bias. Wednesday’s close held just above 143.00, which previously acted as support in early May. A confirmed break below this level could open a move toward 141.50 and possibly 140.00. Unless buyers reclaim the 145.00 area on a closing basis, the path of least resistance remains lower.
  • USD/CAD Extends Losses as Downside Pressure Persists: USD/CAD declined 0.44% on Wednesday to close at 1.3854, continuing its corrective move lower after failing to reclaim the 1.4000 handle. The pair has been in a steady descent since peaking above 1.4200 in April. The 50-day SMA at 1.4040 has recently rolled over, while the 100-day and 200-day SMAs at 1.4193 and 1.4015 remain well above current levels, confirming the shift to a bearish structure. A break below this level would open the path to 1.3660, last seen in March. Resistance is still defined at 1.3950, with a firmer ceiling at the moving average cluster near 1.4050. 
  • Gold Pushes Higher Toward Recent Highs: Gold closed at $3,319, gaining 0.90% as bullish momentum extended for a second straight day. The metal decisively reclaimed the $3,300 mark, continuing its recovery from last week’s dip near the 50-day SMA at $3,184. Gold now trades well above the 100-day and 200-day SMAs, at $2,994 and $2,802 respectively, underscoring the strength of the longer-term structure. Upside targets emerge at $3,350, where the market previously faced profit-taking, and a break above this zone could trigger a move toward the April high near $3,500. On the downside, support has shifted up to $3,250, followed by $3,200 and the 50-day SMA. 

Market Movers:

  • Target Slumps on Weak Outlook and Tariff Concerns: Target fell 5.2% after cutting its full-year sales forecast, blaming softer consumer demand. Management also cited uncertainty tied to tariffs and a backlash to reduced inclusion initiatives. 
  • UnitedHealth Leads Dow Declines After Downgrade: Shares of UnitedHealth sank 5.8% after HSBC downgraded the stock, warning of continued downside risk. The insurer has now lost nearly 39% this year, pressured by cost inflation and policy uncertainty. 
  • Canada Goose Soars on Surprise Beat: Canada Goose surged 19.6% after reporting better-than-expected Q4 earnings, driven by international demand. Management withheld fiscal 2026 guidance due to macroeconomic uncertainty. 
  • Xpeng Jumps on Smaller-Than-Expected Loss: Xpeng rallied 13% after reporting a narrower loss for the first quarter, easing investor concerns. The EV maker projected deliveries between 102,000 and 108,000 for Q2. That would mark a year-over-year increase of more than 200%.
  • Take-Two Slides on $1 Billion Stock Offering: Take-Two Interactive fell 4.5% after unveiling plans to raise $1 billion through a public stock offering. JPMorgan and Goldman Sachs will lead the transaction. The move raised dilution concerns despite the company’s strong game pipeline.
  • Modine Manufacturing Sinks Despite Earnings Beat: Modine shares dropped 11.7% even though it beat Q4 earnings and revenue estimates. Investors seemed concerned about future growth sustainability. Profit-taking also played a role after recent stock outperformance.

Wednesday’s sharp pullback highlighted renewed tension between fiscal policy risks and investor confidence, with surging bond yields reigniting fears around the sustainability of US debt. The sell-off erased recent equity gains, particularly in tech and healthcare, as rising financing costs pressured valuations. Overseas markets held up better, driven by corporate strength and regional stimulus, even as inflation and trade risks loomed. While gold extended its rally on safe-haven demand, oil retreated on oversupply worries. With eyes now on tax bill developments and further economic data, markets face a key test in navigating rising rates and fragile sentiment.