US stocks were little changed on Thursday, stabilizing after a sharp sell-off in the previous session as rising concerns over the federal deficit and surging bond yields weighed on market sentiment.
The Dow Jones Industrial Average edged down 32 points, or 0.1%, while the S&P 500 also slipped 0.1%.
The Nasdaq Composite managed to hold slightly above the flat line.
The muted action followed a bruising session Wednesday, during which the Dow plunged more than 800 points and the S&P 500 dropped 1.6%—moves driven by a poor auction of 20-year Treasury debt and a spike in long-term yields.
The 30-year Treasury yield climbed to around 5.1% on Thursday. The yield on the benchmark 10-year note hovered just below 4.6%.
Both moves reflect mounting investor unease about the ballooning US deficit and inflationary pressures from newly imposed tariffs under President Donald Trump.
Fueling the fiscal concerns, the House of Representatives passed a Republican tax-and-spending package in a party-line vote early Thursday.
The legislation includes lower taxes and a substantial increase in military spending—elements that analysts warn could add trillions to the national debt.
The Congressional Budget Office estimates the bill would cost nearly $4 trillion.
The proposal now heads to the Senate, where it could encounter pushback but remains a key priority for the Trump administration.
Market participants fear that if the bill becomes law, it could further strain bond demand.
With investors already showing signs of fatigue in Treasury auctions, yields may have to rise further to attract buyers—an outcome that would tighten financial conditions and potentially dampen economic growth.
President Trump’s tax bill
The US House of Representatives passed President Donald Trump’s sweeping tax legislation early Thursday, marking a major political win for Republican leadership and advancing one of the administration’s key economic priorities.
The bill cleared the chamber on a narrow vote, with unanimous opposition from Democrats.
The final tally underscored the deep partisan divide over the proposed tax changes, which have been branded by Trump as his “big, beautiful” tax overhaul.
After a marathon 21-hour session, the House Rules Committee pushed the legislation through, meeting Speaker Mike Johnson’s self-imposed Memorial Day deadline.
A key amendment that helped unite various Republican factions involved raising the cap on the state and local tax (SALT) deduction.
The legislation increases the maximum allowable deduction from $10,000 to $40,000—an effort aimed at appeasing members from high-tax states who had previously opposed the cap set under Trump’s 2017 tax reforms.
The bill now moves to the Senate, where it is expected to face further challenges, including possible opposition from moderates and procedural hurdles.
Still, Johnson reaffirmed his goal of sending the bill to President Trump’s desk by July 4.
Jobless claims data resilience
Initial jobless claims dipped slightly last week, signaling continued labor market resilience as employers appear reluctant to cut staff despite broader economic uncertainties.
According to the US Labour Department, seasonally adjusted initial filings for unemployment insurance came in at 227,000 for the week ending May 17, down 2,000 from the previous week and marginally below the Dow Jones forecast of 230,000.
The four-week moving average, which smooths out weekly volatility, inched up to 231,500.
Meanwhile, continuing claims, which are reported with a one-week lag, rose by 36,000 to 1.9 million, marking a new high not seen since late 2021.
The four-week average for continuing claims climbed to 1.89 million, also the highest since November 27, 2021.
The data suggests that while layoffs remain contained, displaced workers are facing increasing difficulty securing new employment, a possible sign of cooling demand in certain segments of the labor market.
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