The S&P 500 ended Thursday near flat, as investors grappled with fears of rising rates and worries about a ballooning U.S. deficit. The 30-year Treasury yield hit its highest since October 2023 as lawmakers passed a bill that investors fear could worsen the U.S. deficit.

The Dow Jones Industrial Average slipped 1.35 points, closing at 41,859.09. The S&P 500 lost 0.04% and ended at 5,842.01, while the Nasdaq Composite advanced 0.28% and settled at 18,925.73.

In a party line vote early Thursday, House members approved the bill that includes lower taxes and additional military spending. The measure — which now goes to the Senate — could increase the U.S. government's debt by trillions and raise the deficit at a time when fears of a flare-up in inflation due to Trump tariffs are already weighing on bond prices and boosting yields. The Congressional Budget Office puts the price tag for bill at nearly $4 trillion.

"Short term, the tax bill is good for the economy. It is going to boost GDP growth in 2026. It reduces taxes for lots of people, it increases spending, especially on defense, and so those things are stimulative to the economy and are going to boost GDP growth," said Jed Ellerbroek, portfolio manager at Argent Capital Management, in an interview with CNBC.

However, he noted that in the longer term, the measure adds to the deficit and it's bad news for the market.

"Yields are going higher, which means prices are going down because Treasurys are becoming incrementally less appealing and trustworthy, as our budget deficit stays extremely high for a very long period of time with no signs of it going back to normal," Ellerbroek added.

The 30-year Treasury bond yield on Thursday traded at levels not seen since 2023, climbing as high as 5.161%, before retreating later in the session. The benchmark 10-year Treasury note yield also backed off its high of the day. The increase in long-term rates, which are benchmarks for consumer loans, could pressure an economy already feeling the weight of Trump's recently implemented universal tariffs.

A poor auction for 20-year Treasury debt helped fuel the spike in yields and the sell-off in stocks on Wednesday. Investors' appetite for Treasurys could worsen if this bill passes the Senate.