Stocks Plunge Amid Rising Borrowing Costs and Global Economic Uncertainty

The Dow Jones Industrial Average fell by 200 points, or 0.6%, to close at 35,111. The S&P 500 index dropped 32 points, or 0.8%, to finish at 4,542. The Nasdaq Composite slid 93 points, or 0.9%, to close at 15,456. The decline was fueled by a surge in the 10-year Treasury yield, which rose to 3.96% from 3.88% earlier in the day. This increase in borrowing costs is expected to have a negative impact on consumer spending and business investment. Markets are also closely watching the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping, as it has the potential to escalate trade tensions between the two nations. The meeting has raised concerns about the global economy, with investors increasingly expecting a prolonged period of economic slowdown. The yen surged against the dollar after the news, reaching its highest level since 2018. The euro also weakened, falling to its lowest level in five weeks. In corporate news, Amazon reported stronger-than-expected earnings, but its stock price declined despite the positive results. Microsoft and Alphabet, the parent company of Google, both posted strong earnings growth, causing their stocks to rise. The VIX index, which measures market volatility, rose 4% to close at 19.85, indicating increased uncertainty among investors. US President Joe Biden’s economic advisor, Jared Bernstein, warned that a US-China trade deal could lead to higher inflation and reduced consumer spending, citing the experience of the 1980s when tariffs were imposed on Japanese imports. As the meeting between Trump and Xi Jinping approaches, investors are bracing for a potential escalation in tensions, with some analysts predicting a sharp decline in global economic growth if a trade deal is not reached.