U.S. Bond Yields Spike Sparks Concern, Dow Drops Over 400 Points

**Three major stock indices decline, Nasdaq loses 17,000 points;

**US oil loses the $80 threshold;

**Marathon Oil surges over 8%, ConocoPhillips proposes acquisition.

US stocks fell across the board on Wednesday, with concerns over the timing of the Federal Reserve's interest rate cuts pushing up Treasury yields and putting pressure on risk appetite. By the close, the Dow Jones Industrial Average fell 411.32 points, or 1.06%, to 38,441.54, hitting a near one-month low, the Nasdaq fell 0.58% to 16,920.58, and the S&P 500 index fell 0.74% to 5,266.95. The VIX fear index surged 10.7% to 14.30.

Market Overview

The Federal Reserve's Beige Book indicated that from early April to mid-May, US economic activity continued to expand, but businesses became more pessimistic about the future, while inflation grew at a moderate pace.

Long-term US Treasury yields continued to rise, reaching a four-week high. Following lackluster US Treasury auctions and stronger-than-expected economic data, hopes for interest rate cuts this year have dimmed. The 2-year US Treasury note, closely linked to interest rate expectations, approached the significant psychological threshold of 5%, reporting at 4.98%, while the benchmark 10-year Treasury yield surged for a second consecutive day, closing at 4.74%.

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Adam Turnquist, Chief Technical Strategist at LPL Financial, stated, "Today's concerns are actually all about interest rates." He added that the yields on the 10-year and 2-year US Treasuries have reached "unsettling levels," which is creating some anxiety among investors.

According to the CME Group's FedWatch Tool, sticky inflation and hawkish Federal Reserve rhetoric have pushed the pricing of Federal Reserve interest rate cuts further into November and December. The likelihood of rates remaining stable in September is close to 54%. Robert Pavlik, Senior Portfolio Manager at Dakota Wealth Management, believes that the Federal Reserve is in a dilemma, with strong growth data but no apparent reaction from inflation.

Leonardo Pellandini, Equity Strategist at Swiss Bank Julius Baer, stated that the risk of rising long-term bond yields is eroding stock valuations, and short-term pressure seems to be a foregone conclusion. However, with the easing of inflation expectations and the upcoming interest rate cuts, the market can continue to climb.On individual stocks, Nvidia rose by 0.8%, further narrowing the gap with Apple. Since releasing a significant earnings report last week, the chip giant has maintained a record of consecutive increases, with a cumulative gain of nearly 20% during this period.

Apple increased by 0.2%, and Bank of America reiterated its "outperform" rating for Apple, with the tech giant set to announce its generative artificial intelligence strategy at next month's developer conference.

Marathon Oil surged 8.4% after ConocoPhillips announced its intention to acquire the company in a stock transaction valued slightly above $15 billion, with ConocoPhillips falling by 3.1%.

American Airlines plummeted by 13.5%, as the company downgraded its second-quarter profit forecast, dragging the airline sector down by over 4%.

International oil prices weakened, with concerns about demand triggered by a retreat in the U.S. gasoline crack spread. The nearby WTI crude oil contract fell by 0.75%, trading at $79.23 per barrel, while the nearby Brent crude oil contract dropped by 0.74%, trading at $83.60 per barrel.

International gold prices fluctuated and weakened under the pressure of expectations for interest rate cuts. The COMEX gold futures for delivery in May at the New York Commodity Exchange fell by 0.63%, trading at $2,340.30 per ounce.