Wall Street tumbles under the weight of rising Treasury yields and US debt worries

NEW YORK (AP) — Wall Street slumped on Wednesday under the weight of pressure from the bond market, where Treasury yields climbed on worries about the U.S. government’s spiraling debt and other concerns.

The S&P 500 fell 1.6% for a second straight drop after breaking a six-day winning streak. The Dow Jones Industrial Average lost 816 points, or 1.9%, while the Nasdaq composite sank 1.4%.

Stocks had been drifting only modestly lower early in the day, after Target and other retailers gave mixed forecasts for upcoming profits amid uncertainty caused by President Donald Trump’s trade war. The market then turned sharply lower after the U.S. government released the results for its latest auction of 20-year bonds.

The government regularly sells such bonds, which is how it borrows money to pay its bills. In this auction, the U.S. government had to pay a yield as high as 5.047% to attract enough buyers to lend it a total of $16 billion over 20 years.

That helped push up yields for all kinds of other Treasurys, including the more widely followed 10-year Treasury. Its yield climbed to 4.59% from 4.48% late Tuesday and from just 4.01% early last month. That’s a notable move in the bond market.

“Bonds finally appear to be getting equities’ attention,” according to Jonathan Krinsky, chief market technician at BTIG, pointing in particular to the 30-year Treasury yield, which jumped back above 5% and approached its highest level since 2023.

Treasury yields have been on the rise in part because of concerns that tax cuts currently under consideration in Washington could pile trillions of more dollars onto the U.S. government’s debt. Concerns are also still brewing about how much Trump’s tariffs will push up on inflation in the United States.

The U.S. government’s bonds aren’t alone, and yields have been on the rise recently for developed economies around the world. That’s partly because their governments are continuing to borrow more cash to pay their bills, while central banks like the Federal Reserve have cut back on their own holdings of government bonds.

When the U.S. government has to pay more interest to borrow money, that can cause interest rates to rise for U.S. households and businesses too, including for mortgages, auto loans and credit cards. That in turn can slow the economy. Higher yields can also make investors less inclined to pay high prices for stocks and other kinds of investments.

Moody’s Ratings became the last of the three major ratings agencies late last week to downgrade the U.S. government’s credit rating on concerns that it may be heading toward an unsustainable amount of debt.

“We do not think that the downgrade matters by itself,” Bank of America strategists wrote in a BofA Global Research report, “but it has served as a wake up call for those investors who had been ignoring the ongoing fiscal discussion.”

On Wall Street, Target sank 5.2% after the retailer reported weaker profit and revenue than analysts expected for the start of the year.

The company said it felt some pain from boycotts by customers. It scaled back many diversity, equity and inclusion initiatives early this year following criticism by the White House and conservative activists, which drew its own backlash. Perhaps more worryingly for Wall Street, Target also cut its forecast for profit over the full year.

Carter’s, which sells apparel for babies and young children, sank 12.6% after cutting its dividend.

CEO Doug Palladini said the company made the move in part because of investments it anticipates making in upcoming years, as well as the possibility that it “may incur significantly higher product costs as the result of the new proposed tariffs on products imported into the United States.”

All told, the S&P 500 fell 95.85 points to 5,844.61. The Dow Jones Industrial Average fell 816.80 to 41,860.44, and the Nasdaq composite dropped 270.07 to 18,872.64.

A growing number of companies have recently said tariffs and uncertainty about the economy are making it difficult to guess what the upcoming year will bring. Others, including Walmart, have said they’ll have to raise prices to offset Trump’s tariffs.

U.S. stocks had recently recovered most of their steep losses from earlier in the year after Trump delayed or rolled back many of his stiff tariffs. Investors are hopeful that Trump will lower his tariffs more permanently after reaching trade deals with other countries.

In stock markets abroad, indexes were mixed amid mostly modest movements across Europe and Asia

London’s FTSE 100 rose 0.1% after a report said inflation in the United Kingdom spiked to its highest level for more than a year in April. Tokyo’s Nikkei 225 fell 0.6% after a report said Japan’s exports have slowed due to tariffs

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

Trader Michael Conlon works on the floor of the New York Stock Exchange, Tuesday, May 20, 2025. (AP Photo/Richard Drew)

Specialist Joseph Maguire works at his post on the floor of the New York Stock Exchange, Tuesday, May 20, 2025. (AP Photo/Richard Drew)

The logo for Target is displayed above a trading post on the floor of the New York Stock Exchange, Tuesday, May 20, 2025. (AP Photo/Richard Drew)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top center left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, May 21, 2025. (AP Photo/Ahn Young-joon)

The logo for Lowe's is displayed above a trading post on the floor of the New York Stock Exchange, Tuesday, May 20, 2025. (AP Photo/Richard Drew)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, May 21, 2025. (AP Photo/Ahn Young-joon)

The logo for Home Depot is displayed above a trading post on the floor of the New York Stock Exchange, Tuesday, May 20, 2025. (AP Photo/Richard Drew)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, May 21, 2025. (AP Photo/Ahn Young-joon)

OAKMONT, Pa. (AP) — By the time Phil Mickelson reached the 18th green at Oakmont on Friday evening, the once-packed grandstand was maybe a quarter-full. Same for the luxury suites.

There was no grand gesture as the 54-year-old Mickelson loped up the hill. No wave to the crowd the way Arnold Palmer did in the same spot on the same course 31 years ago. No lengthy standing ovation from the gallery in return either.

The man whose decades-long pursuit of the U.S. Open made him a fan favorite in his prime — not unlike Palmer in some ways — instead quietly marked his ball 16 feet from the hole, then walked over to the far edge of the green and stared at the leaderboard that glowed in the rainy twilight.

A birdie would have let Mickelson stick around for the weekend at his 34th — and perhaps last — trip to the national championship. Wearing a white hat featuring the logo of his LIV Golf team, the HyFlyers GC, Mickelson stood over the line trying to get the right read.

When the putt slid a foot left of the hole to keep Mickelson one outside the cut at plus-8, a small groan arose from those who stuck around. There was a shout or two of “We love you Phil!” Along the railing, a man leaned toward a friend and said, "His exemption is done. No more U.S. Open for you Phil.”

Maybe, maybe not.

The five-year exemption into the tournament that Mickelson received when he captured the 2021 PGA Championship is expiring. Whether he'll be back to make a run at the one major that has eluded him is anyone's guess.

Mickelson sure isn't saying. He politely declined to talk to reporters after emerging from the scoring area, disappearing into the clubhouse and an uncertain future at a tournament where he's been a runner-up six times.

There are a number of ways for Mickelson to make it to Shinnecock next June. The USGA could offer him an exemption, as it did at Torrey Pines in 2020, though that doesn't appear to be USGA chief championship officer John Bodenhamer's first choice.

“I think the way that we would also think of Phil is we hope he earns his way in, and I think he’d tell you the same thing,” Bodenhamer said Wednesday. "That’s what he did last time. We gave him one and then he went out and won the PGA Championship. So wouldn’t put it past him.”

Mickelson became the oldest major champion ever when he triumphed at Kiawah in 2021 at age 50. A lot has happened since then. Both on the course and off it.

The man known universally as “Lefty” played a major role in LIV Golf's rise, a move that has taken a bit of the shine off of his popularity back home.

And while Mickelson's game can still show flashes — he really did knock a sideways flop shot into the hole during a LIV event last week in Virginia — and he looks fitter now than he did two decades ago, the reality is the swashbuckling approach that once endeared him to so many doesn't work that much anymore at the U.S. Open.

Mickelson appeared to be in solid position to play the weekend when he stood on the 15th tee. He even on the day and 4 over for the tournament, well inside the cutline. A tee shot into the ankle deep rough at the 489-yard par 4 led to double bogey.

He still seemed to be OK when he got to 17, a short uphill par 4. His tee shot sailed into the rough above a greenside bunker. There would be no magic this time. His attempted flop splashed into the sand instead. He blasted out to 25 feet and three-putted for another double bogey.

That put him in a position he's been familiar with for a long time: heading to 18 at the U.S. Open needing to make a birdie of consequence. It didn't happen. And as he disappeared into the clubhouse, along with it came the realization that at this point, it likely never will.

AP golf: https://apnews.com/hub/golf

Phil Mickelson watches his tee shot on the 13th hole during the first round of the U.S. Open golf tournament at Oakmont Country Club Thursday, June 12, 2025, in Oakmont, Pa. (AP Photo/Carolyn Kaster)