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US stocks end sharply lower after Treasury auction

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Yields on the 20-year debt rise to highest since November

2023

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Tax-cut bill fuels further federal deficit concerns

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Oil prices end lower; bitcoin hits a record high

(Updates with closing U.S. market levels)

By Caroline Valetkevitch

NEW YORK, May 21 (Reuters) - Major stock indexes and the

dollar fell on Wednesday as investors worried about a

deteriorating U.S. fiscal outlook and Treasury yields climbed

following a poorly received sale of 20-year U.S. bonds.

The U.S. Treasury Department saw soft demand for the $16

billion sale of 20-year bonds, which reinforced the view that

investors are shying away from U.S. assets.

The three major U.S. stock indexes ended down more than 1%

each. The dollar also fell broadly.

At the same time, concerns continued about U.S. President

Donald Trump's efforts to push through a tax-cutting bill that

could worsen the debt load by $3 trillion to $5 trillion.

Investor sentiment has been fragile since Moody's late last

Friday downgraded the United States' credit rating, stoking

concerns about the country's $36 trillion debt pile.

Republicans are still divided over the details of the tax

legislation, which would extend and add to Trump's 2017 tax

cuts.

There are also concerns about a lack of progress on U.S.

trade talks with trading partners pressing Washington to ease or

eliminate its tariffs.

"There's no doubt the (U.S.) deficit has grown larger," said

Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in

New York. "Is there a chance that Trump over his term will bring

that down? I would be surprised."

"What we're really in is this period that's sort of a

waiting game on tariffs," he added. "Negotiations are going on

... we don't really know if progress is being made."

The Dow Jones Industrial Average fell 816.80 points,

or 1.91%, to 41,860.44, the S&P 500 fell 95.85 points, or

1.61%, to 5,844.61 and the Nasdaq Composite fell 270.07

points, or 1.41%, to 18,872.64.

MSCI's gauge of stocks across the globe fell

7.67 points, or 0.87%, to 873.95.

European stocks dipped, with British sportswear retailer JD

Sports declining. The pan-European STOXX 600

index eased 0.04%.

After the Treasury auction, yields on the 20-year debt

rose to 5.127%, the highest since November 2023. The

30-year bond yield rose 11.5 basis points to 5.0817%

from 4.967% late on Tuesday.

In the foreign exchange market, the euro was up

0.4% against the dollar to $1.1334, after earlier climbing to a

two-week high.

The pound hit its highest level since February 2022

after data showed UK consumer inflation flared hotter in April

than most economists expected.

Also, the yen strengthened against the dollar,

which fell 0.6% to 143.62 yen, extending gains derived in part

from a steep rise this week in domestic bond yields

.

Yields on 30-year Japanese government bonds surged to new

records on Wednesday in the wake of a poor auction result that

raised doubts over coming debt sales in the weeks ahead.

Bitcoin, meanwhile, hit a record high, eclipsing its

previous high from January. It was last little changed at

$108,261.87.

Oil prices settled lower, after Oman's foreign minister said

a new round of nuclear talks between Iran and the U.S. would

take place later this week. Also, the U.S. government released

bearish data on crude and fuel supplies.

Prices had gained earlier in the session on a CNN report on

Tuesday that U.S. intelligence suggests Israel is preparing to

strike Iranian nuclear facilities. Brent futures fell 47

cents, or 0.7%, to settle at $64.91 a barrel. U.S. West Texas

Intermediate crude fell 46 cents, or 0.7%, to $61.57.

Spot gold was up 0.7% at $3,312.77 an ounce following

the weaker dollar.

Investors were also monitoring the Group of Seven finance

ministers' meetings under way in Canada.