The S&P 500 Index ($SPX) (SPY) closed down by -0.02% on Thursday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.03%. December E-mini S&P futures (ESZ26) fell -0.10%, and December E-mini Nasdaq futures (NQZ26) fell -0.03%.
Stock indexes settled mostly lower on Thursday, with the Dow Jones Industrials falling to a 1-week low. Higher crude oil prices on Thursday fueled inflation concerns and pushed up bond yields worldwide. WTI crude rose more than +2% on Thursday after an Iranian official warned Iran may expand the war to the Indian Ocean if the US or Israel attacks again.
However, crude prices fell from their highs on Thursday and sparked short covering in stocks, after a Reuters report said that US and Iranian negotiators are exploring a phased deal that would see Iran reopen the Strait of Hormuz and the US lift its blockade of Iranian ports. Qatari officials are mediating the negotiations.
The jump in crude oil prices on Thursday sparked a sell-off in global bond markets, with the 10-year T-note yield climbing to a 19-year high of 5.22%, the German 10-year Bund yield rising to a 17-year high of 3.62%, and Japan’s 10-year JGB bond yield soaring to a 30-year high of 3.09%. The surge in bond yields weighed on interest rate-sensitive technology stocks Thursday, with chipmakers and AI-infrastructure stocks retreating.
Better-than-expected US news on Thursday showed signs of strength in the US economy, a supportive factor for stocks, after weekly jobless claims unexpectedly fell to a 2-month low and Aug new home sales rose to an 8-month high. Stocks also found support after Treasury Secretary Bessent said late Wednesday that the US and China agreed to extend their trade truce an additional two months until January 10.
US weekly initial unemployment claims unexpectedly fell -1,000 to a 2-month low of 197,000, showing a stronger labor market than expectations of an increase to 200,000.
US Aug new home sales rose +6.4% m/m to an 8-month high of 684,000, stronger than expectations of 616,000.
Hawkish Fed comments on Thursday signaled support for additional rate hikes and weighed on stocks and bonds. New York Fed President John Williams said the Fed still has a lot of work to do given high energy prices and demand driven by investment in artificial intelligence. Also, Philadelphia Fed President Anna Paulson said underlying measures of inflation remain “stubbornly elevated” and have shown little to no progress. “Looking ahead, if conditions evolve as I expect, some modest further tightening of monetary policy may be warranted” to ensure inflation returns to the Fed’s 2% goal.
Nov WTI crude oil prices (CLX26) rose up more than +2% on Thursday after Iran threatened to expand the war in the Middle East after a senior member of Iran’s Revolutionary Guard Corps warned that Iran may expand the war to the Indian Ocean if the US or Israel attacks again. Also, Saudi Arabia came under attack from Iran-backed Houthi rebels on Thursday, saying it intercepted missiles fired toward the Red Sea port of Yanbu and the city of Taif.
Markets are discounting a 71% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets settled mixed on Thursday. The Euro Stoxx 50 closed down -0.43%. China’s Shanghai Composite closed down -1.22%. Japan’s Nikkei-225 Stock Average rallied to a 2-week high and closed up +0.76%.
Interest Rates
December 10-year T-notes (ZNZ6) closed down by -5.5 ticks on Thursday. The 10-year T-note yield rose +6.3 bp to 5.177%. Dec T-notes sank to a 19-year nearest-futures low on Thursday, and the 10-year T-note yield climbed to a 19-year high of 5.221%. Thursday’s +2% increase in WTI crude oil prices boosted inflation expectations and weighed on T-notes. Also, Thursday’s better-than-expected US economic news on weekly jobless claims and Aug new home sales showed economic strength and was hawkish for Fed policy. In addition, hawkish Fed comments on Thursday weighed on T-notes prices after New York Fed President John Williams and Philadelphia Fed President Anna Paulson signaled their support for tighter Fed policy. Finally, weak demand for the Treasury’s $44 billion auction of 7-year T-notes was bearish for T-notes as the auction had a bid-to-cover ratio of 2.42, below the 10-auction average of 2.49.
European government bond yields moved higher on Thursday. The 10-year German bund yield rose to a 17-year high of 3.616% and finished up +4.4 bp to 3.599%. The 10-year UK gilt yield rose to a 1-week high of 5.393% and finished up +3.4 bp to 5.381%.
Eurozone Aug new car registrations rose +4.5% y/y to 708,000 units.
The German Sep IFO business climate survey rose +1.1 to a 3.25-year high of 89.9, stronger than expectations of 89.0.
ECB Executive Board member Isabel Schnabel said the energy shock caused by the Iran war is proving to be longer-lasting than initially thought and is spreading beyond just oil.
ECB Governing Council member Dimitar Radev said policymakers must give recent interest rate hikes time to work before assessing whether additional hikes are needed.
Markets are discounting a 54% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI stocks are under pressure today, weighing on the overall market. ARM Holdings Plc (ARM) closed down more than -8% to lead losers in the Nasdaq 100, and Western Digital closed down more than -4%. Also, SanDisk (SNDK) closed down more than -3%, and NXP Semiconductors NV (NXPI), and Seagate Technology Holdings Plc (STX) closed down more than -2%. In addition, ASML Holding NV (ASML), Broadcom (AVGO), Qualcomm (QCOM), and Microchip Technology (MCHP) closed down more than -1%.
Software stocks are under pressure today, led by a -3% fall in Oracle (ORCL) after it sent a notice citing force majeure to the project’s developer of a data center, a unit of Blue Owl Capital, in New Mexico in an attempt to put off payments should the data center dubbed Project Jupiter get derailed and fail to come online in 2028 as planned. Also, Intuit (INTU) closed down more than -3%, and Autodesk (ADSK), ServiceNow (NOW), and IBM (IBM) closed down more than -2%. In addition, Atlassian (TEAM) closed down more than -1%.
Trucking and freight companies fell on Thursday after WTI crude oil rose more than +2%, raising fuel costs and dampening the profitability prospects for the companies. FedEx Freight Holding (FDXF) closed down more than -4%, and United Parcel Service (UPS) and Saia Inc (SAIA) closed down more than -3%. Also, Knight-Swift Transportation Holdings (KNX), ArcBest (ARCB), JB Hunt Transport Services (JBHT), Marten Transport Ltd (MRTN), CH Robinson Worldwide (CHRW), and XPO Inc (XPO) closed down more than -2%.
Gen Digital (GEN) closed down more than -12% to lead losers in the S&P 500 after the Financial Times reported the company has made an offer to acquire GoDaddy.
MGM Resorts International (MGM) closed down more than -10% after People Inc. dropped its plans to acquire the remaining shares of the company.
Rollins (ROL) closed down more than -6% after Piper Sandler downgraded the stock to neutral from overweight.
Dropbox (DBX) closed down more than -4% after Citigroup downgraded the stock to sell from neutral with a price target of $29.
Alkami Technology (ALKT) closed down more than -2% after JPMorgan Chase double-downgraded the stock to underweight from overweight with a price target of $14.
Everpure (P) closed up more than +11% to lead gainers in the S&P 500 after forecasting 2028 revenue of $7.0 billion to $7.3 billion, well above the consensus of $6.19 billion.
Charles River Laboratories (CRL) closed up more than +6% after reaffirming its 2026 financial guidance.
Revvity (RVTY) closed up more than +6% after launching an IVDR-certified Type 1 diabetes screening kit.
GoDaddy (GDDY) closed up more than +4% after the Financial Times reported that Gen Digital has made an offer to acquire the company.
Earnings Reports (9/25/2026)
None.
