Wall Street stocks gave away early gains on Wednesday and
turned lower in mid-morning trading.  A better-than-expected report on manufacturing led
Treasury yields sharply higher as traders took it to mean the Federal Reserve
will continue with its aggressive policy to slow down the economy and curb

Energy stocks gained along with the crude oil prices.
Salesforce. com led gains in the technology sector after posting
stronger-than-expected quarterly results and raising its outlook for the year.

Also Read | Biden promises ‘protections, safety, and equality’, kicking off Pride Month

The S&P 500 fell 31.17 points or 0.75% to 4,100.98 as
of 1:35 a.m. Eastern Time Zone. The Dow Jones Industrial Average fell 230.84
points or 0.70% to 32,759.28. The Nasdaq declined 60.69 points or 0.50% to

Stocks declined after a report showed that manufacturing
growth in the US accelerated last month against the economists’ expectations
for a slight lockdown.

Also Read | What we know about the lawsuits against Cleveland Browns quarterback Deshaun Watson

Meanwhile, that’s a positive sign for an economy where
investors are concerned about the possibility of a recession, it also likely
keeps the Federal Reserve firmly on its path to increasing interest rates

The yield on the two-year Treasury, which tends to follow
expectations for Fed moves, surged to 2.66% in the 30 minutes after the
report’s release, up from 2.56%.

Also Read | ‘Moderate R’ Elon Musk swings back to centrism in exchange with Andrew Yang

With its key short-term interest rate already off its
record low, the Fed has signalled it may continue to raise it by twice as much
as usual at upcoming meetings. Such hikes are meant to slow down the economy to
control inflation, which is at its highest in four decades.

Investors are feared that too-aggressive hikes could
force the economy into a recession. Even if it doesn’t, higher rates put
downward pressure on the stock and other investment prices.

Also Read | Derek Chauvin, who killed George Floyd, slapped with new federal lawsuits

In addition, the Fed on Wednesday begins its program to
pare back some of the trillions of dollars of Treasurys and other bonds that it
amassed through the pandemic. Such a move should put upward pressure on
longer-term rates.

The 10-year Treasury yield surged to 2.92% from 2.84%
just before the report’s release.

Also Read | Germany to send anti-aircraft missiles, radar systems to Ukraine. Check details

Salesforce, the business software maker, jumped 13% after
posting results that exceeded analysts’ forecasts and raising its outlook for
the year. Other big tech firms including Apple and Microsoft were also trading

Oil prices rebounded after falling from around $120 per
barrel Tuesday when prices jumped after the European Union agreed to slash the
majority of oil imports from Russia because of its invasion of Ukraine.
ConocoPhillips rose 2%.

Also Read | The internet remembers: In 2011, Elon Musk promised to put man on Mars in next 10 years

Prices ultimately declined on Tuesday on speculation that
the OPEC plus group of oil-producing countries might ease production limits and
offset lost oil output from Russia. But just hours before US markets opened,
benchmark US crude had jumped $1.25 to $115.92 per barrel.

Brent crude, the international oil benchmark, climbed
$1.52 to $117.12 per barrel.

The oil prices have jumped over 50% so far this year,
which is a big contributor to the high inflation sweeping the world. A report
Tuesday showed inflation in the 19 countries that use the euro currency hit
8.1% in May, the highest level since records began in 1997.