Overview and Background
On Wednesday, U.S. stock markets experienced their largest daily decline in a month due to growing concerns over the potential increase in U.S. public debt if Congress approves President Donald Trump’s proposed tax cuts.
Key Players and Their Roles
The U.S. Congress is currently grappling with internal divisions over budget cuts, including those affecting the Medicaid healthcare program. Meanwhile, nonpartisan analysts predict that Trump’s proposed plan could add between $3 trillion and $5 trillion to the federal government’s debt, which currently stands at $26.2 trillion.
Market Reactions and Impact
The Dow Jones Industrial Average fell 1.91% to close at 21,860.44 points; the S&P 500 dropped 1.61% to 3,844.61 points; and the Nasdaq Composite descended 1.41% to 18,872.64 points.
The yield on long-term bonds increased due to weak investor demand in a $16 billion sale of 20-year U.S. Treasury debt. The benchmark 10-year yield rose 11.5 basis points to 4.597%, its highest since mid-February.
Additional Factors Influencing Market Volatility
Market nervousness might also be fueled by reports suggesting Israel is planning to attack Iran’s nuclear facilities. Additionally, ongoing tensions between China and the U.S., which encompass technology and could impact trade negotiations, continue to weigh on investors’ minds.
- Tech Sector Performance: Alphabet’s stock (Google’s parent company) rose 2.87%, while NVIDIA, Apple, and Tesla all fell.
- Healthcare Sector Impact: UnitedHealth Group dropped nearly 6% following a Guardian report alleging the healthcare conglomerate secretly paid nursing homes thousands of dollars in bonuses to reduce hospital readmissions for sick residents. HSBC downgraded the stock from “hold” to “reduce.”
- Retail Sector Adjustments: Target’s stock fell 5.2% after the company lowered its annual projections due to decreased discretionary spending.
- Semiconductor Supplier Woes: Wolfspeed plummeted nearly 60% after news broke that the semiconductor supplier was preparing for bankruptcy in a few weeks.
Mexican Markets Rise Amidst U.S. Uncertainty
Despite the uncertainty in U.S. markets, Mexican stock exchanges gained ground on the same day.
Mexican Market Performance
The S&P/BMV IPC, managed by the Mexican Stock Exchange (BMV), rose 0.44% to 58,568.01 points, while the FTSE-BIVA, overseen by the Bolsa Institucional de Valores (Biva), also increased 0.44% to 1,181.19 points.
These gains marked the seventh consecutive day of rising indices and maintained their positions at multi-year highs. The IPC erased its previous losses and approached half a percentage point from its all-time high.
Positive Factors for Mexican Markets
Mexico’s retail sales grew for the fifth consecutive month in March, surpassing analysts’ estimates. Analysts surveyed by Citi México maintained their economic growth projections for 2025 and 2026 but worsened their inflation outlook for this year.
The Committee on Business Cycle Phases of the Mexican Economy stated that they still lack sufficient evidence to determine if Mexico is in a recession amidst uncertainty surrounding U.S. trade policies.
Mexican stock prices continued to diverge from U.S. market uncertainties, focusing instead on domestic factors following Moody’s downgrade and the resulting Wall Street decline.
Peñoles, Coca-Cola FEMSA, and Asur led the gainers.
