Traders work on the floor of the New York Stock Exchange on Wednesday (local time). [Reuters]
Traders work on the floor of the New York Stock Exchange on Wednesday (local time). [Reuters]

US stocks fell across the board Wednesday as a surge in long-term Treasury yields — driven by the Federal Reserve's policy decision and escalating geopolitical tensions in the Middle East — rattled markets. Rising crude oil prices renewed inflation fears, and a wave of profit-taking in AI semiconductor shares dragged technology stocks lower.

The Dow Jones Industrial Average closed down 1,153.18 points, or 2.19%, at 51,594.14 on the New York Stock Exchange. The S&P 500 fell 112.63 points, or 1.52%, to 7,316.15, while the NASDAQ Composite dropped 433.97 points, or 1.74%, to 24,442.94. The Philadelphia Semiconductor index tumbled 5.33%.

Markets reacted more sharply to the spike in long-term yields than to the Fed's decision to hold rates steady. The Fed kept its benchmark interest rate at 3.50–3.75% annually, but three of the 12 Federal Open Market Committee members dissented, calling for a 0.25 percentage point increase. Investors read the dissents as a signal that inflation concerns remain significant within the Fed, dampening sentiment.

Tensions in the Middle East added to the pressure. A fresh escalation in military tensions between the United States and Iran sent crude oil prices sharply higher, spreading fears of renewed inflation pressure into the long-term government bond market. Brent crude futures surged 7.9% to $90.74 a barrel, while West Texas Intermediate futures rose 6.56% to $84.46 a barrel.

The yield on the 30-year US Treasury bond stood at 5.21% as of 3:34 p.m. Eastern time Wednesday, up 0.10 percentage point from the previous session. During trading it climbed as high as 5.24%, its highest level since July 2007, before the global financial crisis. The 10-year Treasury yield rose 0.07 percentage point to 4.67%, while the 2-year yield edged down 0.04 percentage point to 4.24%.

Selling was concentrated in AI semiconductor shares. Nvidia fell 3.55%, AMD dropped 5.51% and Intel declined 5.12%. Micron Technology tumbled 9.94%, compounded by news that its CEO had sold shares, and SanDisk fell 7.32%. SK Hynix's American depositary receipts also slipped 2.60%.

Most major technology stocks also declined. Amazon fell 1.82%, Meta dropped 1.31% and Tesla lost 2.97%. Alphabet was the lone bright spot among big tech, rising 0.90% on expectations for the unveiling of a next-generation AI model and a corporate restructuring.

After-hours trading produced a split verdict following earnings releases. Microsoft surged more than 8% in extended trading after reporting results that beat market expectations, driven by strong cloud business growth. Meta, by contrast, fell more than 7% after hours despite topping revenue forecasts, as investors focused on the rising costs tied to its AI investment expansion.

"US stocks extended their decline after the FOMC meeting as long-term yields spiked and remarks by Donald Trump added to the pressure," said Seo Sang-young, an analyst at Mirae Asset Securities. "The sharp rise in long-term yields was particularly burdensome."


hajun825@heraldcorp.com