Stock markets closed essentially flat on Thursday after having recovered from the worst selloff in a month the day before, sparked by investor worries about the U.S.’ fiscal future.
The S&P 500 lost 0.4%. The Dow lost 1 point to close flat, while the tech-heavy Nasdaq gained 0.3%.
Bond yields spiked earlier in the day before steadying. The yield on the 10-year Treasury hit 4.63% before falling to 4.54%. The yield on the 30-year Treasury surged to 5.15%, its highest level in more than a year, before falling to 5.05%.
The spikes reflect investor worries that the $4.5 trillion package of tax cuts and spending House Republicans passed Wednesday morning would add to the U.S.’ already hefty government debt. T
“[U]nless the bill is watered down by the Senate, there is clearly a risk of yields rising even further,” said John Higgins, chief markets economist at Capital Economics.
The nation’s ballooning deficit led credit-rating agency Moody’s to downgrade U.S. debt last Friday. The cut means the U.S. no longer has a top credit rating from any agency.
Stocks meandered in trading before closing slightly higher. Some large tech company stocks rose, pulling up indexes. Alphabet gained 2%, Amazon rose 1.5%, and Meta gained 0.6%.
Solar stocks sank, with Sunrun plunging 37.5%, Enphase Energy losing 17.8%, and First Solar falling 4.6%. The budget bill in the House would strip Biden-era incentives for clean energy.
Economic data continued to come in mixed. A pair of National Association of Realtors reports indicated that existing home sales for April fell to the lowest level in 15 years, weighed down by still-high housing prices and unaffordable mortgage rates.
However, a government report revealed fewer Americans applied for jobless aid last week than expected, showing the labor market continues to hold steady in a shifting policy environment. And a survey of purchasing managers showed manufacturing activity rose from April to May.
“[B]usiness confidence has improved in May from the worrying slump seen in April, with gloom about prospects for the year ahead lifting somewhat,” said Chris Williamson, chief economist at S&P Global Market Intelligence. “However, both sentiment and output growth remain relatively subdued.”
This story was originally featured on Fortune.com
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