Market Report for Wednesday, May 21, 2025
Wednesday delivered a reminder that stocks don’t float when bond yields flood the room. Add in a geopolitical flare-up and a designer defection, and the day went downhill like a silk tie in a paper shredder.
Level Change 5/21/25 (%)
– – – – – – – – – – – – – – –
-1.9 Dow
-1.4 Nasdaq
-1.3 Nasdaq 100
-1.6 S&P 500
-2.7 S&P 400
-2.8 S&P 600
Wall Street’s latest skid was driven less by earnings and more by auctions—specifically, the Treasury’s lackluster $16B sale of 20-year bonds. It went off like a karaoke ballad at a funeral. The yield landed at 5.047%, the first 20-year above 5% since October 2023, and nearly 1.2 points above pandemic-era levels. After the gavel fell, the bond’s yield promptly spiked to 5.103%, its highest this year.
Why the cold shoulder? Investors demanded extra yield to take on what used to be considered the world’s safest debt, suggesting they now want hazard pay. Blame a rising tide of fiscal doubt, including a Republican tax bill that could add $3.3T to the debt by 2034—news that might have once rattled Moody’s, had Moody’s not already stripped the US of its perfect Aaa rating last week.
Investors got the memo: if Washington’s going to binge-spend like a college freshman let loose in a credit card kiosk, interest rates will climb. Morgan Stanley warned earlier this month that once the 10-year crosses 4.50%, high yields could start torching stock valuations again. It closed today at 4.58%, up from 4.17% just three weeks ago.
As stocks fell, so did hopes for diplomacy, with reports that Israel is preparing to strike Iran’s nuclear facilities. US-Iran negotiations are fraying, with enrichment capability the dealbreaker. Israel’s military believes that if talks fail, its operational window could close quickly—and it’s ready to act. The next round of talks is Friday in Rome.
Back in earnings land, Lowe’s (LOW -1.7%) cleared the low bar set for Q1, but investors weren’t impressed. Revenue dropped 2%, earnings slid nearly 5%, and tariffs have prompted a supply chain shakeup. Archrival Home Depot sees an opening to poach market share amid the trade turmoil. Lowe’s admitted it’s on the back foot—but not backing down. “We’re not in the habit of donating market share,” said CEO Marvin Ellison. The company is combing through supply chains one category at a time, looking for ways to escape the China tariff trap.
Then came the hardware headline of the day: Jony Ive, Apple’s former design deity, will lead product design at OpenAI. The AI oracle bought his LoveFrom studio in a $6.5B all-equity deal and unveiled plans to build a “family of AI devices.” OpenAI boss Sam Altman says the goal is to reinvent the very idea of a computer—something Siri has politely declined to do for over a decade. At Apple (AAPL -2.3%), the move lands like a well-designed slap from its past, just as critics accuse the company of sleepwalking through the AI boom.
Today’s bond backup alone was enough to flatten stocks. Breadth was lousy. The equal-weight S&P dropped more than 2%, its fifth-worst day of the year.
And that was Wednesday: bond blowback, budget bloat, brewing conflict, and the ghost of Apple past now prototyping elsewhere.
— Jason Kelly
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