- Nasdaq Composite fell 1.32% due to rising Treasury yields and Fed rate hike expectations
- 10-year US Treasury yield hit 5.0458%, its highest since 2007, pressuring equities
- Trump-Xi meeting and US-Iran conflict developments kept investors cautious on markets
The Nasdaq Composite fell more than 1% on Wednesday, as rising Treasury yields and growing expectations of further Federal Reserve rate hikes pressured technology and growth stocks.
Investors were also tracking developments around the US-Iran conflict and awaiting President Donald Trump's meeting with Chinese President Xi Jinping.
The tech-heavy index was down 1.32% at 26,885 at 01:14 p.m GMT, after opening at 27,213.52. It traded as high as 27,217.33 and slipped to an intraday low of 26,885.
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The sell-off came as markets reassessed the outlook for US monetary policy. Federal Reserve Governor Michael Barr said the central bank may need further rate increases, arguing that inflation risks have risen while labour-market risks have eased, as per economic times report. His comments reinforced expectations that borrowing costs could remain elevated for longer.
Traders were already assigning a 50% probability of at least a 25-basis-point rate hike next month, according to the CME FedWatch Tool. The prospect of higher rates has weighed particularly heavily on growth-oriented technology stocks, whose valuations are more sensitive to changes in financing costs.
Bond markets added to the pressure. The yield on the 10-year US Treasury note climbed to 5.0458%, its highest level since 2007, before easing slightly. Rising yields can reduce the relative appeal of equities and increase the cost of capital for companies.
The dollar also strengthened, with the dollar index rising 0.54% to 101.09, reaching its highest level since July 29. Oil prices were another focus after crude resumed its rise, while markets assessed whether geopolitical tensions could disrupt energy supplies.
Investor attention also remained on the Trump-Xi meeting, with discussions expected to cover trade, AI regulation and US arms sales to Taiwan.
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At the same time, Iran's President Masoud Pezeshkian said Tehran would not surrender in its war with the United States but remained committed to diplomacy, adding to uncertainty around the geopolitical backdrop.
The broader Wall Street session reflected the pressure. The Dow Jones Industrial Average was down more than 250 points, while the S&P 500 also moved lower.
The Nasdaq's decline follows its recent record-setting run, with the index having reached an intraday record high earlier in the week as artificial intelligence continued to support technology shares.
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