US stocks: US markets fall as higher yields and oil prices flag inflation risk

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Brent crude climbed 4.2% to more than $104 a barrel as intensifying attacks on vessels in the Gulf and the Strait of Hormuz heightened concerns about disruptions to Middle Eastern supplies.
Pressure from the bond market also persisted. The benchmark 10-year Treasury yield hovered around 5.29%, near its highest level since 2002.
The combination of expensive oil and elevated borrowing costs weighed on risk appetite globally. Amazon, Tesla and Nvidia declined between 0.3% and 1.3%, leading losses among megacap growth companies.
Semiconductor stocks came under heavier selling pressure. Marvell Technology and Intel dropped about 3% each, while AMD lost 2% and Micron Technology fell 1.4%.
Samsung Electronics’ projection of record quarterly profit failed to lift the wider chip sector, with its shares closing lower in South Korea.
According to Reuters report, concerns about technology companies’ borrowing needs added to the cautious mood. The Wall Street Journal reported that Broadcom was arranging $50 billion in financing for OpenAI, while Oracle was seeking an undisclosed amount.
The prospect of large-scale debt issuance by technology companies raised fears of fiercer competition for capital. Shares of Broadcom and Oracle declined with the broader sector.
The pullback followed losses on Wednesday, when rebounding oil prices and Treasury yields dragged the S&P 500 and Nasdaq away from record highs and ended the Dow’s four-session winning run.
“We’ve got duelling headwinds with energy prices and Treasury yields and light on the economic data front, kind of a wait and see on earnings which really kick off in earnest next week,” said Art Hogan, chief market strategist at B. Riley Wealth.
Eight of the S&P 500’s 11 sectors declined. Technology and healthcare were the weakest performers, while energy rose about 2% and consumer staples gained 1%. Utilities edged higher.
At 9:43 a.m. ET, the Dow Jones Industrial Average was down 88.19 points, or 0.17%, at 51,096.19. The S&P 500 declined 28.08 points, or 0.36%, to 7,773.69, while the Nasdaq Composite lost 155.07 points, or 0.58%, to 27,383.62.
Earnings move into focus
Investors are turning their attention to third-quarter results, with major financial companies including JPMorgan Chase due to report next week.
Expectations of strong corporate profits have helped support US equities despite geopolitical uncertainty, higher energy costs and concerns about restrictive monetary policy.
Technology and energy are projected to deliver the strongest profit growth, while aggregate S&P 500 earnings are forecast to increase 30.6%, according to LSEG.
Federal Reserve Governor Christopher Waller indicated that policymakers could pause at their next meeting. He said further increases would probably be required to bring inflation back to the central bank’s 2% goal but noted there was “flexibility” over the pace of rate hikes.
Markets largely expect the Fed to keep rates unchanged in October, while leaving open the possibility of another increase in December, according to the CME FedWatch Tool.
Wolfspeed jumped 9.6% after receiving a conditional $1.5 billion loan commitment from the US Department of Defence.
PepsiCo rose 2.1% despite cutting its annual core-profit forecast and announcing plans for additional cost reductions. Declining shares outnumbered advancing ones by 1.64 to 1 on the NYSE and 2.53 to 1 on the Nasdaq.
The S&P 500 registered three new 52-week highs and 12 new lows. The Nasdaq Composite recorded 13 new highs and 128 new lows.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
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