US Stock Markets Plummet as Yields and Oil Prices Surge
US stock markets tumbled on Thursday as Treasury Department's intervention in the bond market proved short-lived. Long-dated government yields resumed their climb, pushing borrowing costs higher and erasing previous gains. The Dow Jones Industrial Average led the declines, falling 1.32%, while the S&P 500 dropped 0.87% and the Nasdaq Composite slid 1%. The Treasury Department's expanded buyback programme failed to sustainably lower long-term yields, which rebounded sharply.
The surge in crude oil prices, triggered by President Trump's threat of 'economic warfare' against Iran, added to inflationary concerns and weighed on investor sentiment. Walmart was the worst performer among blue-chip stocks, plunging 9.15% after reporting disappointing sales growth and issuing soft earnings guidance. Boeing dropped 3.18%, while Goldman Sachs declined 1.92%.
The Treasury Department's announcement that it would 'at least double' its buybacks of longer-dated debt provided only temporary relief. The 10-year Treasury yield climbed more than 5 basis points to 4.706%, and the 30-year yield surged over 5 basis points to 5.247%. Treasury Secretary Scott Bessent told CNBC that the buyback could exceed $4 billion, but market participants remained sceptical.
The CBOE Volatility Index (VIX) surged 7.19%, or 1.07 points, to close at 15.96, indicating heightened expectations of near-term market turbulence.