- US stocks declined as traders fretted over Trump’s plan to levy steep tariffs.
- The president-elect is reportedly considering using emergency powers to enact tariff plans.
- Bond yields continued to rise, with the 10-year firmly above 4.7% for the first time since last spring.
US stocks dropped on Wednesday as traders eyed the reports that President-elect Trump could declare a national emergency in order to enact his tariff plan.
Bond yields continued to creep up and major stock average fell in early-morning trading. The 10-year Treasury yield is hovering near its highest level since last spring, climbing above 4.7% this week.
CNN reported Wednesday morning that Trump is considering invoking his emergency powers as president to carry out his plan to levy steep tariffs. Sources told the outlet that a discussion of using emergency powers had already taken place, adding that “nothing is off the table.”
The Trump-Vance transition team did not immediately respond to a request for comment from Business Insider.
Traders are eyeing risks that inflation and interest rates could rise in tandem. The yield on the 10-year US Treasury, a reflection of long-run interest rate expectations in the economy, edged up to 4.707% Wednesday morning, its highest level since last April.
Markets have also dialed up their bets that the Fed will pause its rate-cutting cycle at coming meetings. Investors are pricing in just a 5% chance the central bank will cut rates 25 basis points at its meeeting this month, according to the CME FedWatch tool.
The probability of a rate cut in March also declined to 39%, down from a 51% chance a month ago.
Mark Newton, the Head of Technical Strategy at Fundstrat, said he believed yields would peak around 5% in the first quarter of 2025 before falling.
“Bottom line: While the start of 2025 is turbulent, fundamentals still the same as 2024 (strong),” Tom Lee, the head of research at Fundstrat, said in a separate note. “If his view is correct, this rise in yields is a false flag and I would not get structurally bearish because of the recent surge in yields.”
Private payroll data came in lighter than expected, with ADP reporting private sector companies added 122,000 jobs last month, fewer than forecasts of 136,000 and down from 146,000 jobs added in November.
In the meantime, investors are waiting for the release of the December FOMC meeting minutes Wednesday afternoon, as well as Friday’s jobs report. Both will serve as key data points ahead of the central bank’s coming interest rate decision at the end of the month.
Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Wednesday:
Here’s what else happened today:
- Why Apple stock just got a rare downgrade to “sell.”
- Bitcoin is overbought and vulnerable to a 13% sell-off, according to one technical analyst.
- Spiking bond yields means the US could risk a situation similar to the one that ousted former British PM Liz Truss, according to Apollo’s chief economist.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil edged up 0.39% to $74.54 a barrel. Brent crude, the international benchmark, was higher by 0.3% to trade at $77.28 a barrel.
- Gold rose 0.53% to $2,663 an ounce.
- The 10-year Treasury yield rose ine basis point to 4.703%.
- Bitcoin slumped 5.27% to $95,278.
