S&P 500 posts first losing day in 3 as Nvidia’s climb fails to lift market, Dow drops 400 points: Live updates

Stocks slid Wednesday as pressure from rising Treasury yields outweighed a continued rally in artificial intelligence darling Nvidia.

The Dow Jones Industrial Average fell 411.32 points, or 1.06%, to 38,441.54. The S&P 500 dipped 0.74% to 5,266.95, marking its first negative session of the last three. The Nasdaq Composite slipped 0.58% to 16,920.58, as Nvidia’s advance somewhat mitigated losses for the technology-heavy index.

Nvidia climbed 0.8%, reversing an early loss of 2.6%. The megacap tech name has risen every trading session since issuing its blockbuster earnings report last Wednesday. Since then, the stock has surged roughly 21%.

All 11 sectors that comprise the broad S&P 500 retreated, underscoring the breadth of market weakness. More than 440 stocks in the index were lower on the day.

In all, 27 of the 30 stocks in the Dow fell. Insurance provider UnitedHealth led the blue-chip average lower with a slide of more than 3% following management commentary around its Medicaid business. Other stocks tied to the federal health insurance program dropped, including Molina Healthcare, Humana and Elevance Health.

Wednesday’s move lower comes as the 10-year Treasury note yield ticked higher for a second day, last trading above 4.6%. The benchmark yield popped to troublesome levels for stock investors following a Treasury Department auction on Tuesday that was met with weak demand. Higher yields can lower the multiples investors are willing to pay for stocks, drive up borrowing costs, hurt consumer spending and make T-bills and money market funds more attractive.

“Today is really all about interest rates,” said Adam Turnquist, chief technical strategist at LPL Financial, adding that the 10-year and 2-year yields have touched “uncomfortable levels.” “That all is creating some angst among investors.”

While there has been a choppy start to the shortened week, the major averages are on track to close the month with notable gains. The S&P 500 is up 4.6% in May, while the Dow has advanced about 1.7%. The Nasdaq has climbed more than 8% this month.

The advances arrive even as traders have lowered their expectations for Federal Reserve rate cuts. Indeed, fed funds futures trading data suggests a nearly 54% chance that rates will hold steady in September, according to the CME FedWatch Tool.

Investors are asking: “What is the summer going to deliver? And is the macro environment really changing?” said Shelby McFaddin, investment analyst at Motley Fool Asset Management. “The year is moving quickly. And some of the things that were expected to happen, the probability of them happening is decreasing.”