US Stocks Fall as 30-Year Yield Hits 2004 High: Markets Wrap

(Bloomberg) — Stocks fell after fresh gains in oil prices fueled further selling in bonds and lifted 30-year Treasury yields to the highest since 2004.

The S&P 500 looked set to nearly erase its weekly advance as futures dropped 0.6%. Nasdaq 100 contracts slid 1.1%. Oracle Corp. fell 5.4% in premarket trading after sending a force majeure notice over a data center project in New Mexico. The Treasury selloff continued at the longer end, with 30-year yields up as much as four basis points to 5.44%. The shorter end saw some relief.

Brent topped $105 a barrel. Higher-for-longer rate expectations put the dollar on course for its longest winning streak since May. Initial jobless claims in the week through Sept. 19 held close to historic lows.

Inflation anxiety is back to being front and center for investors, with concerns about Brent above $100 and an overheating US economy piling fresh pressure on bond markets. That’s taken the shine away from stocks, pulling the Nasdaq 100 down from a record high.

“Higher bond yields are becoming a more meaningful headwind for equities,” said Simon Wiersma at ING Bank. “Middle East de-escalation could take some pressure off bond markets, but the bigger story is the structural rise in global borrowing needs.”

Oil’s latest leg higher came after an Iranian official warned Tehran may expand the war to the Indian Ocean if the US or Israel attacks again.

“Now that the war has expanded from the Persian Gulf and the Strait of Hormuz to the Red Sea, it may, in the next phase of a potential conflict, widen further,” Iran’s semi-official Fars cited Yahya Rahim Safavi, who’s also a senior member of the Islamic Revolutionary Guard Corps, as saying.

“Oil prices remain the key driver overall,” said Nadege Dufosse, head of multi-asset at Candriam. “Investors are flying blind as it’s impossible to guess which way the talks between Iran and the US will go.”

The rout in bonds swept into Asia, with yields in Japan, Australia and New Zealand climbing by more than 10 basis points on Thursday. Equity benchmarks for Asia and Europe headed for back-to-back losses.

Inflation Warning

Federal Reserve Bank of New York President John Williams said there was still a lot of work to do on inflation given high energy prices and demand driven by investment in AI.

Fresh warnings about price pressures were also raised at two rate decisions in Europe. The Swiss National Bank lifted its inflation forecast as it dialed down its threat of intervention to support the franc. Norges Bank increased borrowing costs for a second time this year and said it was primed to hike again.

For the Federal Reserve, swaps fully reflect three quarter-point hikes over the next year, with significant hedging for a fourth.

“A resolution in the Middle East would certainly bring some relief, particularly to European rates given the energy channel, but in the US the story goes beyond oil at this stage,” said Alessandro Gabellone at Bank Degroof Petercam.

“Inflation has been above target for years, while fiscal imbalances and rising interest costs are increasingly part of the discussion around long-term yields,” he said.

Traders will follow the summit between Trump and China’s Xi Jinping later today at a time when tensions between the world’s two biggest economies persist over rare earths, technology curbs and Taiwan.

“Super Intelligence” would be a big topic of discussion, Trump said on social media. “I want to leave it exactly where it is. That is China’s position also.”

Treasury Secretary Scott Bessent announced that a trade agreement struck by the leaders last year will now run an additional two months until Jan. 10, clearing the way for two more meetings in the coming months at summits in Shenzhen and Miami.

What Bloomberg Strategists Say:

“If the economy really is overheating, as seems to be the talk of the town, yields can rise significantly from here. The bigger signal is the market’s revealed preference: price hawkishness and sell bonds. With oil marching higher again and PCE, NFP and ISM manufacturing next week, that bias matters.”

Corporate News:

Qualcomm Inc. said it has renewed its global licensing pact with Apple Inc., starting April 2027. Meta Platforms Inc. unveiled a palm-sized, dedicated gadget for using Muse, the company’s popular new artificial intelligence assistant, pushing deeper into the AI devices market with a surprise announcement. Starbucks Corp. is closing 250 underperforming locations across North America to focus on stores with higher potential. An OpenAI model hacked an Australian government website earlier this year, marking one of the first known cyberattacks by artificial intelligence on a government database. A consortium backed by BlackRock Inc. and IFM Investors Pty has entered exclusive talks for a potential acquisition of Stack Infrastructure Inc.’s Asia Pacific data centers, people familiar with the matter said. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.6% as of 8:36 a.m. New York time Nasdaq 100 futures fell 1.1% Futures on the Dow Jones Industrial Average fell 0.3% The Stoxx Europe 600 fell 0.3% The MSCI World Index fell 0.2% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.1% to $1.1365 The British pound fell 0.2% to $1.3218 The Japanese yen fell 0.3% to 158.81 per dollar Cryptocurrencies

Bitcoin fell 1.1% to $83,318.1 Ether fell 1.2% to $2,638.81 Bonds

The yield on 10-year Treasuries was little changed at 5.12% Germany’s 10-year yield advanced two basis points to 3.57% Britain’s 10-year yield declined one basis point to 5.34% Commodities

West Texas Intermediate crude rose 1.8% to $93.81 a barrel Spot gold fell 0.5% to $4,265.47 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Julien Ponthus.

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