U.S. equities fall

U.S. equities fell on Wednesday as pressure continued to build in the bond market, pushing Treasury yields to levels not seen in more than two decades.

Dow Jones drops 0.66%

The Dow Jones Industrial Average lost 341.41 points, or 0.66%, to close at 51,179.87.

S&P 500 slips 0.22%

The S&P 500 shed 0.22% to end at 7,801.77.

Nasdaq Composite declines

The Nasdaq Composite slipped 0.22% to settle at 27,538.69.

10-year Treasury yield hits 5.365%

Investors were spooked by the benchmark 10-year Treasury note yield reaching its highest level since April 2002 at 5.365% on Wednesday.

30-year Treasury yield hits 5.732%

The 30-year bond yield also hit its highest level since May 2002 at 5.732%.

Treasury auction results

The 10-year yield later backed off its high of the day after an auction in which the Treasury sold $39 billion in 10-year notes.

Bill Merz on yields

Bill Merz, head of capital markets research at U.S. Bank Asset Management, noted that the bid-to-cover ratio and indirect bidder participation were 'quite strong'.

“there's investor interest at these relatively elevated yield levels compared to what people have become used to in the last 15 to 20 years, but we need to take it with a grain of salt. there are a lot of other drivers out there that we need to take into consideration as well on a standalone basis”

Fed minutes show rate hike expected

The minutes from the Federal Reserve's September meeting showed that officials anticipate raising rates before the end of the year.

“with regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end”

Bank stocks drop

Bank stocks dropped as investors feared higher interest rates would hinder lending activity.

Gold hits lowest level

Gold hit a low of 4,091.2 on Wednesday, reaching the lowest level since Aug. 3.

Technology stocks pressured

Technology stocks also came under pressure amid worries that higher borrowing costs would limit the artificial intelligence buildout.

CrowdStrike shares drop

CrowdStrike shares were lower by almost 5% while Palo Alto Networks and Meta Platforms lost more than 3% and 2%, respectively.

Mike Dickson on yields

Mike Dickson, head of research and quantitative strategies at Horizon Investments, said the margin for error has narrowed as it relates to earnings.

“the level of yields seem very justified, but it doesn't make them irrelevant”

Inflation expectations stable

Even with the latest rise in yields, inflation expectations appear 'very well anchored'.

“if the 10-year started rising because inflation expectations become unanchored, well now it can get a little bit out of control”

U.S. crude prices fall

U.S. crude prices settled down 1.3% at $88.28 per barrel on Wednesday.