Dow Jones Industrial Average gets pummeled by rising Treasury yields

The Dow Jones fell on Wednesday, shedding 800 points at its lowest and slipping below 42,000.
Investors have pivoted to concerns about the US federal budget which will send US deficits higher, not lower.
Market concerns that the Trump administration’s bespoke budget won’t actually do anything to fix inflation or US debt issues sent Treasury yields higher, putting downward pressure on equity markets.

Joshua Gibson FXStreet

The Dow Jones Industrial Average (DJIA) recoiled on Wednesday, tumbling 800 and testing below 42,000 after demand for United States (US) Treasuries declined. Financial markets are showing waning interest and confidence in US debt financing, even with 20-year Treasury bonds offering a yield north of 5% for the first time since October of 2023. The bid-to-cover on 16B worth of 20-year Treasuries fell below its six-month average of 2.57, slipping to 2.46 and sending market sentiment into a brief tailspin.

The US government inches closer to approving US President Donald Trump’s “big, beautiful budget” that will add almost four trillion dollars to the US deficit over the next decade. The deficit-swelling budget comes less than a week after Moody’s downgraded US sovereign debt, citing long-running failures by the US government to reel in government spending or sufficiently increase tax receipts.

A rate cut, a rate cut, my kingdom for a rate cut!

Investor hopes for another rate cut from the Federal Reserve (Fed) continue to get pushed further out this year. According to Fed policymakers, the looming threat that US tariffs could reignite inflation and throw a wrench in US economic growth is limiting their ability to adjust policy rates as they wait for clear data. The Trump administration is barreling towards the end of its own “reciprocal tariffs” suspension deadline, and evidence of ink-on-paper trade deals remains functionally non-existent. With the future of US trade policy muddying the waters, rate traders are now split on whether the Fed will deliver its first quarter-point rate cut in September or October.

Dow Jones price forecast

Fundamentals have bled through the chart paper, taking over market dynamics as investors react to headlines about trade and federal budgets. The Dow Jones Industrial Average is still trading above the 200-day Exponential Moving Average (EMA) near 41,570, at least for now. Bullish price action continues to have the wind knocked out of its sails, and buyers have thus far struggled to muscle the major equity index back to the 43,000 handle.

Dow Jones daily chart

Economic Indicator

S&P Global Composite PMI

The S&P Global Composite Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging US private-business activity in the manufacturing and services sector. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the private economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for USD.

GBP/USD: Daily gains remain capped by 1.3650

GBP/USD leaves behind Monday’s pessimism and advances marginally on Tuesday. Cable’s humble gains, however, appear to have met quite a decent resistance in the 1.3650 zone for now, in a context of a slight selling pressure hovering around the Greenback.

EUR/USD struggles to regain pace; gyrates around 1.1670

EUR/USD clinches humble gains around 1.1670 following Tuesday’s close on Wall Street. Indeed, marginal losses in the US Dollar encourages spot to set aside two dauly pullbacks in a row and maintain the 1.1700 barrier on the cross-hairs for now. Moving forward, US inflation tracked by the PCE and another revision of Q2 GDP data should keep investors entertained on Wednesday.

Gold: Buyers still hold the grip

Gold navigates the middle of its daily range near $4,650 per troy ounce on Tuesday. The lack of clear direction in the yellow metal comes on the back of the widespread cautious tone among market participants, a mildly offered stance in the US Dollar and a marked decline in US Treasury yields across the curve.

BNB Price Forecast: BNB rally stalls as Pasteur hardfork launches on BSC mainnet

BNB (BNB) shows subtle weakness, sliding below $700 on Tuesday. Last week's broader crypto rally propelled BNB to $725 from support around $600. The token native to Binance, the largest crypto exchange by trading volume, flaunts a bullish picture. However, momentum indicators signal that the uptrend may be overstretched, raising the odds of an extended correction.

Nvidia earnings: A quick look at expectations

The 2026 Q2 earnings season is nearly over for S&P 500 members, with the reporting cycle notably positive. But looming large this week is none other than AI-favorite NVIDIA (NVDA) , whose results will wrap up the reporting cycle for the Magnificent Seven group as well.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.