FX.co ★ Wall Street Cautious as Tax Bill Raises Deficit Fears

On Thursday, U.S. stock markets ended with little change as investors deliberated over the implications of President Trump’s recently approved tax-and-spending legislation amid growing concerns about the increasing U.S. deficit. The S&P 500 and the Dow Jones Industrial Average recorded slight declines, whereas the Nasdaq rose by 0.3%. Wall Street maintained a cautious stance, given that the bill, which encompasses tax reductions and enhanced defense expenditures, is progressing to the Senate and could significantly expand the national debt, which stands at $36 trillion. The Congressional Budget Office estimates the cost at nearly $4 trillion, sparking fears regarding fiscal instability. This apprehension was mirrored in the bond market, where the 30-year Treasury yield temporarily peaked at 5.14%, the highest level since 2023. Solar stocks, such as Sunrun, plummeted by 37%, impacting the energy and utilities sectors negatively, while communication services experienced gains. In spite of the market volatility, S&P Global’s composite Purchasing Managers’ Index rose to 52.1 in May, indicating some economic resilience, though housing and employment statistics delivered inconsistent messages.