The 10-year yield tops 5% and stocks fall into Trump-Xi talks
The 10-year Treasury yield hit 5.10%, its highest since 2007, after hot PMI data. Two-thirds of our feed fell, and futures pointed lower into the summit.
The bond market set the tone on Wednesday. The 10-year Treasury yield closed at 5.10%, its highest since 2007, after strong business-activity data and a Fed governor’s call for more rate hikes. Stocks fell with it, and futures pointed lower again overnight as President Trump and Xi Jinping prepared to meet.
Yields at a 19-year high
The 10-year yield rose to 5.10% from 4.96% on Wednesday, per AP, and briefly touched about 5.14% during the session. That is the level it last held in 2007, before the financial crisis sent yields lower.
Two things pushed it up. US business activity rose to a more-than-five-year high in September on a surge in new orders, per Yahoo Finance, which suggests the economy is running hotter than the Fed wants. And Fed Governor Michael Barr said “further hikes are likely to be needed” to bring inflation down, per AP. Bloomberg’s overnight wrap described traders as building bets on another Fed rate hike.
In our feed, the long-bond fund TLT fell 1.58%. Gold, which usually suffers when yields rise because it pays no interest, went with it: GLD lost 1.80%.
Almost everything fell
The S&P 500 fell 0.75% to 7,706.03, the Nasdaq Composite 1.13% to 26,936.04 and the Dow 352.10 points, or 0.68%, to 51,511.59, per AP. Our feed agrees: SPY fell 0.72%, QQQ 0.84% and DIA 0.71%.
The selling was broad. 66 of the 100 stocks and funds we track fell and 34 rose. Rate-sensitive groups were hit hardest. The small-cap fund IWM fell 1.84%, because smaller companies tend to borrow more and feel higher rates sooner. Utilities and real estate, which investors often hold for income that competes with bond yields, fell too. NextEra Energy (NEE) lost 2.83%, American Tower (AMT) 2.55%, Duke Energy (DUK) 1.84% and Prologis (PLD) 1.41%.
Large tech fell with the market. Alphabet (GOOGL) lost 3.80% to $337.83, Oracle (ORCL) 3.11% and Broadcom (AVGO) 2.62%. We found no company-specific news for Alphabet; the coverage we found tied the drop to yields and oil. Shopify (SHOP) gave back 3.66% after Tuesday’s 7.12% gain.
Energy was the main sector that rose, as oil climbed back above $100. Exxon Mobil (XOM) gained 1.59%, Chevron (CVX) 1.53% and the energy fund XLE 0.96%.
Three stories of their own
McDonald’s (MCD) fell 4.81% to $238.32 after its investor day. The company committed $8.5 billion through 2036 to support its franchisees and pushed its target of 50,000 restaurants worldwide from 2027 to 2028, citing cautious consumer spending and higher construction costs, per Invezz and Proactive Investors. Wendy’s and Yum! Brands barely moved, per 24/7 Wall St., so the market read this as a McDonald’s problem rather than a restaurant-industry one.
Airbnb (ABNB) fell 7.56% to $149.58, the worst move in our feed, after Tuesday’s 3.01% drop. We could not confirm a single cause. Investing.com pointed to cautious analyst positioning, including Morgan Stanley’s Equal Weight rating from September 16, which is a thin explanation for a move this size.
Cybersecurity rose against the market. Palo Alto Networks (PANW) gained 5.00% to $393.30 and CrowdStrike (CRWD) 4.97% to $262.49. Okta (OKTA) rose 4.46% on our movers list and Palantir (PLTR) 3.68%. Palo Alto had launched a new AI-based security service the day before, and 24/7 Wall St. described the group’s gains as a rotation into cybersecurity while the rest of tech sold off.
Where the data disagrees with the headline
On Monday and Tuesday, the market story was AI: which companies Meta’s Muse agent helps and which it threatens. Wednesday was about something older, the price of money. A 10-year yield above 5% raises the rate every future dollar of profit is discounted at, which weighs hardest on companies whose value depends on earnings years away. That is why Alphabet, Oracle and small caps fell harder than the S&P 500. It is also why the fall came on good economic news: a strong economy made more rate hikes more likely.
This morning
Asian markets were mixed, per AP. Japan’s Nikkei 225 rose 0.8% to 65,513.99, helped by chipmakers. Hong Kong’s Hang Seng fell 0.4% to 24,730.44, the Shanghai Composite 1.2% to 3,889.47 and Australia’s S&P/ASX 200 0.7%. South Korea was closed for the Chuseok holiday.
Brent crude rose 0.57% to $103.67 a barrel and US crude 0.67% to $92.78, per AP. The US rejected Iran’s proposal to reopen the Strait of Hormuz, per Investing.com.
US stock futures were lower late Wednesday evening: S&P 500 futures down 0.4%, Nasdaq-100 futures 0.56% and Dow futures 0.28%, per Investing.com. Treasury Secretary Scott Bessent said Washington and Beijing had agreed to extend their trade truce by two months to early January. Xi Jinping landed in Washington on Wednesday evening for Thursday’s talks, where AI, chip sales to China, rare earths and farm purchases are expected on the agenda.
In after-hours trading, our feed had Airbnb at $150.05, McDonald’s at $238.92 and Alphabet at $339.05, close to Wednesday’s closing prices.
What to watch today
- Weekly initial jobless claims, 8:30 a.m. ET.
- Census Bureau housing data: new residential construction and new home sales are both listed for today.
- The Treasury’s seven-year note auction, 1:00 p.m. ET, a test of demand for bonds after Wednesday’s selloff.
- Costco reports fiscal fourth-quarter results after the close.
- President Trump’s talks with Xi Jinping in Washington.
- Whether the 10-year yield holds above 5%.
- Durable goods orders on Friday at 8:30 a.m. ET, and Micron’s results on September 30 after the close.
Not financial advice. iTrading Buddy summarizes publicly available market data and news; every figure above is sourced from the reporting available before the US open on the date shown. Verify anything you act on.