DJI: Dow Jones Wipes Out 800 Points as Treasury Auction Fails to Excite Investors

Weak appetite for 20-year Treasury bonds sent yields climbing to more than 5%, highlighting investor cautiousness over buying US debt.

👀 30-Stock Dow Drops 800 Points

• The Dow Jones Industrial Average DJI sank more than 800 points, or nearly 2%, on Wednesday after a weak auction of 20-year US Treasuries rattled investor confidence and sent yields skyrocketing above 5%.
• The dismal bond sale added fuel to broader concerns over America’s rising debt load and shaky fiscal trajectory — especially after Moody’s stripped the US of its Aaa rating, again, due to rising debt concerns.
• The Treasury Department offered $16 billion worth of 20-year bonds — but buyers weren’t biting. Demand fell well below expectations, with investors accepting a yield of 5.047%, well above the 4.613% average seen in the last six auctions. Translation: higher yields, lower confidence.

🤔 Weak Auction Sparks Concerns

• The weak auction arrives just as fiscal alarm bells are ringing. President Trump’s proposed tax legislation — what he’s calling a “big, beautiful bill” — is projected to add at least $3 trillion to the US debt over the next decade.
• That outlook is giving bond buyers second thoughts, while equity investors are reassessing their risk appetite.
• As yields climbed, stocks slid fast. Besides the drop in the Dow, the S&P 500 fell 1.6% and the Nasdaq lost 1.4%. Bond prices recovered slightly in Asian trading Thursday and US stock futures made an attempt to pare back some of Wednesday’s losses.

🤝 OpenAI Bets on Smart Devices

• Adding to the broad-based selling was an unusual acquisition — tech stocks were caught off guard when OpenAI, the maker of ChatGPT, announced it had agreed to buy former Apple design guru Jony Ive’s AI-focused hardware startup io.
• The deal was valued at $6.4 billion and will pull Ive into the day to day of OpenAI where he’ll be overseeing design operations but stay independent of the company.
• Shares of Apple AAPL dropped 2.3%. In other news, Tesla slumped 2.7%, leading the Magnificent Seven pullback, a day after Musk said he plans to remain CEO for at least five more years.