Stocks Slip, Yields Jump as Trump’s Tax Bill Faces Party Turmoil

​U.S. stock futures dipped and Treasury yields climbed Wednesday as fiscal worries gripped markets amid escalating infighting over President Trump’s long-promised tax-cut bill.

The drama played out in real time as the powerful House Rules Committee scheduled an unusual 1 a.m. hearing to hash out the bill’s provisions—an urgent move highlighting just how fractured the Republican party remains. Despite Trump’s personal push to rally lawmakers, many remain unconvinced by what he calls his “big, beautiful bill.”

As the standoff deepened, markets responded fast. Futures on the Dow, S&P 500, and Nasdaq 100 all slid by more than half a percent. Meanwhile, Treasury yields surged, with the 10-year reaching 4.53% and the 30-year returning to the 5% mark.

Adding to the tension, Moody’s recent downgrade of U.S. sovereign debt continued to cast a shadow. With America’s debt nearing $36 trillion, the credit warning amplified worries that more tax cuts could worsen the fiscal picture—especially with tariffs and inflation already straining the economy.

Rate-sensitive tech stocks were hit hard. Nvidia, ahead of its earnings next week, led the decline among mega-cap names, sliding nearly 1% in premarket. At the same time, the bond market’s selloff pushed yields higher, making future profits from high-growth companies less attractive.

One notable blow came from Wolfspeed, which collapsed more than 55% on reports it's preparing to file for bankruptcy. Palo Alto Networks also dropped after a spike in operating expenses spooked investors.

Despite the political gridlock, not all the news was gloomy. Morgan Stanley upgraded its U.S. equities outlook to “overweight,” citing resilient global growth. And while the S&P 500 has pulled back, it's still up more than 17% from April’s lows, lifted by a temporary U.S.–China tariff truce and cooler inflation data.

​For now, markets are stuck in limbo—held back by Washington dysfunction, yet still buoyed by hope that the tax bill, if passed, could eventually reignite investor optimism. But with rates rising and volatility creeping back, traders aren’t taking chances. Not until the smoke clears on Capitol Hill.