NEW YORK — The S&P 500 closed down 0.4 percent at 7,337, as rising Treasury yields pressured equities and semiconductor shares retreated from earlier highs. The Nasdaq Composite fell 0.1 percent to 25,806.
Treasury yields climbed across the curve, reflecting the market's recalibration of Federal Reserve policy expectations following recent hawkish commentary. The two-year Treasury yield, sensitive to immediate rate expectations, rose several basis points, while longer-dated bonds also moved higher, pushing the 10-year yield toward key resistance levels. The upward shift steepened the yield curve slightly, indicating bond investors are pricing in a higher-for-longer interest rate environment with less conviction in near-term rate cuts.
The rising cost of capital placed duration-sensitive assets under pressure, making future earnings streams less attractive when discounted at higher rates. While Nvidia gained 1.8 percent to $211.50 and Microsoft rose 1.7 percent to $420.77, the chip sector gave up intraday advances.
The selling pressure extended beyond technology. The Dow Jones Industrial Average dropped 0.6 percent to 49,597. The small-cap Russell 2000 index fell 1.6 percent to 2,840, signaling broad-based weakness. Amazon shares declined 1.4 percent to $271.17, while Tesla rose 3.3 percent to $411.79 on company-specific news.
Market participants await the Consumer Price Index report scheduled for release May 15. Any upside surprise in the CPI could reinforce hawkish sentiment among central bank officials, potentially leading to further increases in Treasury yields. The bond market remains sensitive to incoming data that could influence the Fed's next policy decision, particularly regarding the timing and magnitude of future rate adjustments.
