The S&P 500 slipped in volatile trading and Treasury yields rose on Wednesday as President Trump’s proposed tax-cut law faced a rare overnight hearing aimed at influencing Republican holdouts opposed to the bill’s passage.
The House Rules Committee scheduled an unusual 1 a.m. ET hearing that is expected to run well into daylight hours as Republicans try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states.
House Speaker Mike Johnson acknowledged, however, that a vote by the full chamber might not happen on Wednesday.
Nonpartisan analysts said the proposed plan could add between $3 trillion and $5 trillion to the federal government’s $36.2 trillion debt.
“This tax bill could be a coin toss in its current form; it could go either way,” said Mariam Adams, managing director at UBS Wealth Management.
“It really depends on how much relief the average investor… (is) receiving. If it can impact and give some kind of faith to individual investors, that could give us a really good rally.”
At 1:43 p.m. ET, the Dow Jones Industrial Average sank 627.86 points, or 1.47%, to 42,049.38, the S&P 500 lost 58.74 points, or 0.99%, to 5,881.72, and the Nasdaq Composite fell 142.96 points, or 0.75%, to 18,999.75.
Nine of the 11 S&P sub-sectors traded lower, with Health Care the worst hit.
U.S. bonds have been pressured since the start of the week, when Moody’s downgraded the country’s sovereign credit rating.
Yields on the 30-year note were back up to 5.01% on Wednesday, with the benchmark 10-year yield climbing 5.2 basis points to 4.53%.
UnitedHealth Group dropped 4.5% after a Guardian report said the healthcare conglomerate secretly paid nursing homes thousands in bonuses to help reduce hospital transfers for ailing residents.
HSBC also downgraded the stock to “reduce” from “hold.”
In earnings, retailer Target fell 3.5% after slashing its annual forecast due to a pullback in discretionary spending.
Wolfspeed tumbled nearly 70% following a report that the semiconductor supplier was preparing to file for bankruptcy within weeks.
Despite the losses, U.S. stocks have had a solid month so far. The S&P 500 has climbed more than 17% from its April lows, when Trump’s reciprocal tariffs roiled global markets.
A pause in the tariffs, a temporary U.S.-China trade truce and tame inflation data have pushed equities higher, although the S&P 500 is still about 3% off its record highs.
Brokerage Morgan Stanley upgraded its stance on U.S. equities to “overweight,” saying the global economy was still expanding, albeit slowly, amid policy uncertainty.
Meanwhile, bitcoin scaled a fresh all-time high of $109,481.83.
Exchange operator Coinbase gained 2.1% and crypto miners including Riot Platforms rose about 3%.
Declining issues outnumbered advancers by a 2.76-to-1 ratio on the NYSE and by a 2.02-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and two new lows, while the Nasdaq Composite recorded 41 new highs and 46 new lows.
