NEW YORK, Oct. 23 (Xinhua) -- U.S. stocks fell sharply on Wednesday, driven by rising U.S. Treasury yields and ongoing concerns about market sentiment.
The Dow Jones Industrial Average fell by 409.94 points, or 0.96 percent, to 42,514.95. The S&P 500 sank 53.78 points, or 0.92 percent, to 5,797.42. The Nasdaq Composite Index shed 296.48 points, or 1.60 percent, to 18,276.65.
Nine of the 11 primary S&P 500 sectors ended in red, with consumer discretionary and technology leading the laggards by losing 1.82 percent and 1.68 percent, respectively. Meanwhile, real estate and utilities went up 1.02 percent and 1.01 percent, respectively.
The 10-year Treasury yield climbed to 4.25 percent, its highest since late July, marking a 44-basis-point surge in October. Soaring Treasury yields have been a point of pressure, despite the Federal Reserve's recent rate cuts in September. Economic data, as well as concerns about rising fiscal deficits under a possible second Trump presidency, have been cited as reasons behind the move higher.
"To me, it's all about the impact of higher rates. The market is repricing the probability that the Fed can aggressively cut rates," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management. "There have been parts of the economy that haven't felt the impact of rising interest rates yet, but the longer rates remain higher, the more different parts of the economy have to reprice to that reality ... the economy is out of equilibrium."
Among the biggest contributors to the Dow's drop, McDonald's shares plummeted more than 4 percent after the CDC linked an E. coli outbreak to the fast-food chain's Quarter Pounder burgers, resulting in 10 hospitalizations and one death. McDonald's alone was responsible for more than 100 points of the Dow's decline.
On the economic front, U.S. mortgage applications declined for the fourth consecutive week, highlighting the ongoing challenges posed by elevated borrowing costs.
Additionally, existing home sales fell by 1 percent in September to a seasonally adjusted annual rate of 3.84 million, marking the lowest level since October 2010. This decline follows a revised 3.88 million in August and fell short of expectations, which had predicted a rate of 3.9 million. The persistent pressures from higher interest rates are dampening both demand and affordability in the housing market. ■