U.S. stocks closed broadly lower Wednesday, erasing an early gain, as investors reacted to a late-afternoon surge in bond yields.
Bond yields climbed to their highest level in four years after the Federal Reserve released minutes from its latest policy meeting. The minutes showed bullish sentiment among policymakers, confirming their intention to raise interest rates this year.
The yield on the 10-year Treasury note rose sharply after the minutes came out, touching 2.95 percent, its highest level since January 2014. Higher bond yields indicate investors expect more risk of inflation. They also can threaten stock prices by making bonds more appealing versus stocks.
“We’re moving back to normal volatility, we’re moving back toward normal interest rates, normal inflation,” said Erik Davidson, chief investment officer for Wells Fargo Private Bank. “This is what normal looks like.”
The Standard & Poor’s 500 index fell 0.6 percent, to 2,701.33. The Dow Jones industrial average lost 166.97 points, or 0.7 percent, to 24,797.78. The blue chip average had been 300 points higher before the late-afternoon slide. The Nasdaq gave up 0.2 percent, to 7,218.23. — AP