New YorkCNN —
US stocks took a dive Wednesday as mounting concerns over big tech earnings, rising Treasury yields and political uncertainty drove down all three major indexes.
Investors have been increasingly on edge about the prospect of former President Donald Trump winning the election, a possibility for which Wall Street has been preparing to a greater extent. While polls remain effectively dead-even, Trump’s prospects have grown since the start of this month in political betting markets.
“The logic here is very simple: Candidate Trump has called for a significant increase in import tariffs to revive domestic manufacturing,” Steven Ricchiuto, chief US economist at Mizuho Securities, said in a Wednesday afternoon note. “These tariffs are seen as immediately raising the price of consumer goods and, in the process, reversing the goods deflation that has helped pull inflation back towards the Fed’s 2% target.”
Trump’s policy proposals, if enacted, are also expected to cause the government to borrow significantly more money compared to Vice President Kamala Harris’ policy plans. That would make it riskier to invest in government-issued securities, leading investors to demand higher interest rates to hold US debt.