01:29 PM EDT, 05/29/2024 (MT Newswires) -- US equity indexes fell after midday Wednesday as most government bond yields jumped amid concerns continuing strength in economic data will lend credence to calls from monetary policy hawks that interest rates ought to remain higher for much longer.

The Nasdaq Composite fell 0.3% to 16,965.1, the S&P 500 was down 0.6% to 5,275.9, and the Dow Jones Industrial Average slid 1% to 38,477.5. All sectors were in the red intraday, with energy and utilities among the steepest decliners.

The US 10-year Treasury yield soared 8.6 basis points to 4.63%, the highest level since early May. The two-year yield jumped 3.4 basis points to almost 4.99%, a psychologically important threshold. The US Dollar index rose 0.4% to 105.06.

Sovereign bonds and equities cheapened on Wednesday, and the dollar strengthened, according to a Scotiabank note. Still, most of the moves extended Tuesday's sell-off driven by consumer confidence data, soft Treasury auctions, and Fed-speak.

More auctions are on tap Wednesday that will further test appetite for US debt after Tuesday's 2-year bid-to-cover fell to 2.41 from 2.66 the last time and the 5-year bid-to-cover fell to 2.3 from 2.39, Derek Holt, head of capital markets economics at Scotiabank, said in the note.

Those are hardly disasters but reflected [Minneapolis Fed President Neel] Kashkari's comments that low probability hikes remain on the table for him and an "indefinite" pause is possible, Holt said in the note. Kashkari spoke hours ahead of the Tuesday government debt auctions.

The probability of the Fed keeping rates unchanged in November rose to 43% from 29% a week ago, according to the CME FedWatch Tool. The likelihood of a cut was 44%, down from 47%. Rising bond yields on Wednesday spurred concerns that interest rates will stay "elevated for longer," a note from D. A. Davidson said.

In economic news Wednesday, the Richmond Fed's monthly manufacturing index improved to zero in May from minus 7 in April, compared with expectations for no change in a survey compiled by Bloomberg. The reading indicates neither expansion nor contraction.

Redbook US same-store sales jumped 6.3% from a year earlier in the week ended May 25, following a 5.5% increase a week ago.

In company news, American Airlines ( AAL ) shares sank nearly 15% intraday, the worst performer on the S&P 500, after the company cut its Q2 earnings outlook late on Tuesday. Concurrently, the air carrier said its chief commercial officer will depart next month.

ConocoPhillips ( COP ) agreed to acquire Marathon Oil ( MRO ) in an all-stock deal worth roughly $22.5 billion, including $5.4 billion of debt. Marathon shares jumped 8.1% intraday, the top performer on the S&P 500.

West Texas Intermediate crude oil fell 0.7% to $79.25 a barrel.

Gold slid 0.7% to $2,363.10 an ounce, while silver rose 0.7% to $32.35.