Dow, S&P, Nasdaq Futures Mixed on Tax Bill Win and Bitcoin Surge

• The U.S. House of Representatives has passed President Trump’s “big, beautiful” tax bill, but concerns persist over the $36 trillion deficit and the potential for a budget bill that could add trillions more.
• Treasury yields reflected fiscal unease, with the 30-year bond yield hitting 5.09%, a peak since October 2023, while Bitcoin (BTC) soared to a record $111,861.22 and Ether (ETH) gained 5% to $2,656.50.
• Investors await key economic data, including PMI readings, jobless claims, and home sales, as markets navigate uncertainty around fiscal policy and potential tariff impacts.

The U.S. financial markets are navigating a complex landscape shaped by fiscal policy developments, macroeconomic concerns, and shifting investor sentiment. The passage of President Donald Trump’s tax bill through the House of Representatives marks a significant legislative milestone for Republican leaders, achieved through a narrow, party-line vote after two months of crafting and last-minute revisions to secure support. This victory, however, comes amid heightened market unease over the U.S. debt burden, with the proposed budget bill potentially exacerbating the nation’s $36 trillion deficit. Moody’s recent downgrade of the U.S. credit rating, explicitly tied to this legislative proposal, has intensified scrutiny on the fiscal implications of such policies.

Equity markets reflect this cautious mood. On Wednesday, the Dow Jones Industrial Average (^DJI) plummeted 816 points, driven by a sharp rise in Treasury yields that underscored fears about the deficit’s trajectory. The S&P 500 (^GSPC) declined 1.61%, while the Nasdaq Composite fell 271 points, or 1.41%, closing at 18,872.64. Despite these losses, futures markets showed signs of stabilization early Thursday, with S&P 500 futures gaining 8 points, or 0.14%, to 5,869.50, and Nasdaq 100 futures rising 50 points, or 0.24%, to 21,206.75. In contrast, Dow futures edged down 17 points, or 0.04%, to 41,929.00, signaling lingering uncertainty.

Fixed-income markets are also reacting to the fiscal policy debate. The 30-year Treasury bond yield climbed 0.12, or 2.48%, to 5.09, reaching its highest level since October 2023, reflecting investor concerns about long-term debt sustainability. Conversely, the 10-year Treasury yield dipped slightly by 0.0120, or 0.2612%, to 4.5820. The bond market’s sensitivity to deficit-related developments highlights the broader economic implications of the budget bill, which faces an uncertain path in the House due to the GOP’s slim majority.

In commodities, gold prices fell $12.10, or 0.37%, to 3,297.60, and oil prices dropped $1.00 to 60.47, suggesting a cautious retrenchment among investors. The Cboe Volatility Index (VIX), often referred to as the market’s “fear gauge,” declined 0.41, or 1.96%, to 20.46, indicating a slight easing of investor anxiety but still elevated uncertainty compared to historical norms.
Cryptocurrencies, however, continue to defy broader market caution. Bitcoin (BTC) surged to a record high of $111,861.22, pushing its market capitalization to $2.2 trillion. Ether (ETH) also advanced, gaining 5% intraday to $2,656.50, with a remarkable 63% month-over-month increase, fueled by growing institutional interest. This divergence between traditional and digital assets underscores the unique drivers in the cryptocurrency space, where optimism about adoption and innovation contrasts with macroeconomic concerns weighing on equities and bonds.

Looking ahead, investors are focused on key economic indicators for further clarity. Preliminary PMI readings for U.S. manufacturing and services, due later today, will provide insights into how businesses are responding to potential tariff impacts in May. Additionally, weekly jobless claims and existing home sales data will offer a snapshot of labor market resilience and housing sector dynamics. These metrics are critical as markets assess the interplay between fiscal policy, economic growth, and inflationary pressures.

The convergence of legislative developments, deficit concerns, and upcoming economic data creates a pivotal moment for U.S. markets. While the Republican tax bill’s passage signals political momentum, its potential to inflate the deficit keeps investors on edge. With the House vote on the budget bill complete, markets remain cautiously attentive, weighing optimism in select asset classes against broader concerns over fiscal sustainability and economic stability.

WallStreetPit does not provide investment advice. All rights reserved.

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