The S&P 500 Index ($SPX) (SPY) closed up by +0.19% on Thursday, the Dow Jones Industrial Average ($DOWI) (DIA) closed up by +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.31%. December E-mini S&P futures (ESZ26) rose +0.20%, and December E-mini Nasdaq futures (NQZ26) rose +0.34%.
Stock indexes recovered from losses on Thursday and settled higher after bond yields fell from multi-decade highs, spurring gains in stocks. Comments from Fed Vice Chair Philip Jefferson sparked short covering in T-notes on Thursday when he said it may take more time before policymakers can judge whether further interest rate increases are needed to slow inflation. The 10-year T-note yield fell from a 24-year high of 5.34% and finished down -5 bp at 5.24%. Mr. Jefferson’s comments reduced the chance of a Fed rate hike at this month’s FOMC meeting to 26% from 70% on Monday.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
Stocks also found support after an upbeat forecast from Micron Technology boosted chipmakers and AI-infrastructure stocks and bolstered expectations that ramped-up AI spending will continue. Micron Technology, the largest US maker of memory chips, forecasts revenue of about $61.5 billion in fiscal Q1, which runs through November, well above the consensus of $56.8 billion, signaling AI investment continues to remain strong.
Signs of a stable US labor market supported stocks after weekly initial unemployment claims unexpectedly fell to a 10-week low and continuing unemployment claims fell to a 3.5-year low.
Stocks initially retreated on Thursday, with the S&P 500 falling to a 1.5-week low and the Dow Jones Industrial sliding to a 3.5-month low. Ever-rising crude oil prices are raising inflation risks and pushing global bond yields higher, weighing on stocks. WTI crude oil rose more than +2% on Thursday, boosting inflation expectations and pushing the 10-year T-note yield up to a 24-year high of 5.34%. The 10-year UK Gilt yield also rose to a 19-year high of 5.50%, and the 10-year Japan JGB yield rose to a 30-year high of 3.13%. Massive government borrowing and strong investment in artificial intelligence infrastructure are also boosting demand for capital and pushing global bond yields higher. Stocks were also undercut after the Sep ISM prices paid sub-index rose more than expected to a 5-month high, signaling inflationary pressures.
US weekly initial unemployment claims unexpectedly fell -1,000 to a 10-week low of 197,000, showing a stronger labor market than expectations of an increase to 200,000. Weekly continuing claims unexpectedly fell -11,000 to a 3.5-year low of 1.701 million, showing a stronger labor market than expectations of an increase to 1.725 million.
The US Sep ISM manufacturing index unexpectedly fell -0.1 to 54.5, weaker than expectations of an increase to 55.0. The Sep ISM prices paid sub-index rose +8.8 to a 5-month high of 77.9, stronger than expectations of 73.0 and a sign of price pressures.
US Aug construction spending rose +0.9% m/m, stronger than expectations of no change.
Minneapolis Fed President Neel Kashkari said he doesn't know how high interest rates will have to go to cool prices, adding that it's the Fed's job to tame inflation and "we will do what we need to do to get inflation back down to our target."
Nov WTI crude oil prices (CLX26) rose more than +2% on Thursday on the failure of the US and Iran to reach a lasting peace agreement that would fully reopen the Strait of Hormuz, keeping global oil supplies tight. Gains in crude oil accelerated on Thursday after the Wall Street Journal reported that the US is sending a third aircraft carrier strike group and an additional 10,000 troops to the Middle East and that President Trump told aides he expects to resume bombing Iran by the end of November.
Markets are discounting a 26% 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 fell to a 3.5-month low and closed down -1.49%. China's Shanghai Composite did not trade, with markets in China closed for the week-long Golden Week holidays. Japan's Nikkei-225 Stock Average rallied to a 6-week high and closed up sharply by +3.30%.
Interest Rates
December 10-year T-notes (ZNZ6) closed up +14.5 ticks on Thursday. The 10-year T-note yield fell -4.6 bp to 5.239%. Dec T-notes recovered from a 24-year nearest-futures low on Thursday and moved higher, and the 10-year T-note yield fell from a 24-year high of 5.340%. Short covering emerged in T-notes on Thursday after the Sep ISM manufacturing index unexpectedly fell and after Fed Vice Chair Philip Jefferson said the Fed may take more time before deciding on the next move in interest rates, signaling the Fed will keep rates unchanged at this month’s FOMC meeting.
T-notes initially retreated on Thursday after WTI crude oil rose more than +2%, raising inflation expectations. Also, signs of strength in the US labor market are hawkish for Fed policy and bearish for T-notes after weekly jobless claims unexpectedly fell to a 10-week low. In addition, rising price pressures undercut T-notes after the Sep ISM prices paid sub-index rose more than expected to a 5-month high
European government bond yields are mixed today. The 10-year German bund yield fell to a 1-week low of 3.506% and finished down -7.8 bp at 3.508%. The 10-year UK gilt yield fell from a 19-year high of 5.504% and finished down by -2.7 bp to 5.398%.
The Eurozone Sep S&P manufacturing PMI was revised upward by +0.2 to 52.9 from the previously reported 52.7, the fastest pace of expansion in 4.25 years.
The UK Sep S&P manufacturing PMI was revised downward by -0.1 to 51.9 from the previously reported 52.0.
Markets are discounting a 21% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Accenture (ACN) rose more than +15% on Thursday to lead gainers in the S&P 500 and IT services stocks after reporting Q4 revenue of $18.7 billion, above the consensus of $18.04 billion. Also, Globant SA (GLOB) and Cognizant Technology Solutions (CTSH) closed up more than +6%, and EPAM Systems (EPAM) closed up more than +5%. In addition, Gartner (IT) closed up more than +3%.
Chipmakers and AI-infrastructure stocks moved higher on Thursday after Micron Technology forecast stronger-than-expected Q1 revenue. Micron Technology (MU), Lam Research (LRCX), and Applied Materials (AMAT) closed up more than +3%, and KLA Corp (KLAC), SanDisk (SNDK), and Seagate Technology Holdings Plc (STX) closed up more than +2%. Also, Nvidia (NVDA), Analog Devices (ADI), Marvell Technology (MRVL), and Western Digital (WDC) closed up more than +1%.
Energy producers and service providers rallied on Thursday as WTI crude oil rose more than +2%. Marathon Petroleum (MPC) closed up more than +6%, and Valero Energy (VLO) closed up more than +5%. Also, APA Corp (APA) and Occidental Petroleum (OXY) closed up more than +4%, and Phillips 66 (PSX) closed up more than +3%. In addition, Devon Energy (DVN) closed up more than +2%, and Chevron (CVX), Baker Hughes (BKR), and ConocoPhillips (COP) closed up more than +1%.
Synopsys (SNPS) closed up more than +12%, adding to Wednesday’s +4% rally and leading Nasdaq 100 gainers after signing a deal with Amazon.com valued at over $1 billion over multiple years.
Vicor (VICR) closed up more than +7% after raising its Q3 sequential revenue growth forecast to more than 30% from a prior view of more than 20%.
Corteva (CTVA) closed down more than -9% to lead losers in the S&P 500 after a federal court denied California’s request to temporarily block Corteva’s planned business spinoff.
McCormick & Co (MKC) closed down more than -4% after saying in a conference call that it expects organic sales growth for the full year to be between the low end and midpoint of its 1%-3% growth range.
Walt Disney (DIS) closed down more than -3% to lead losers in the Dow Jones Industrials after the Wall Street Journal reported the company plans to cut hundreds of jobs as part of a restructuring of its television operations.
Earnings Reports (10/2/2026)
None.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.