The S&P 500 Index ($SPX) (SPY) closed down by -0.75% on Wednesday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -0.68%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.85%. December E-mini S&P futures (ESZ26) fell -0.76%, and December E-mini Nasdaq futures (NQZ26) fell -0.87%.
Stock indexes settled lower on Wednesday, pressured by soaring bond yields. Crude prices rose by more than +1% on Wednesday, boosting inflation expectations, lifting bond yields and undercutting market sentiment. The 10-year T-note yield jumped to a 19-year high of 5.13% on Wednesday and raised the odds of a Fed rate hike at next month’s FOMC meeting to 69% from 53% on Tuesday. Chipmakers and AI-infrastructure stocks also slid on Wednesday, weighing on the broader market and giving back some of Tuesday’s gains that pushed the Nasdaq 100 to a new record high.
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Hawkish comments from Fed Governor Michael Barr also boosted bond yields and pressured stocks as he signaled that he favors additional Fed tightening, saying, "further policy adjustments by the Fed are likely to be needed to ensure inflation comes down to target in a timely fashion."
Wednesday’s US economic news was better than expected, supporting stocks but pushing bond yields higher after the Sep S&P manufacturing PMI unexpectedly rose +3.1 to 57.0, stronger than expectations of a decline to 53.7 and the fastest pace of expansion in 4.25 years.
Stocks have support on positive anticipation ahead of a summit on Thursday between Presidents Trump and Xi Jinping.
Stocks found some support on Wednesday after the Organization for Economic Co-operation and Development (OECD) raised its US GDP forecast and cut its inflation forecast for this year. The OECD raised its 2026 US GDP forecast by +0.2 to 2.2% from a June forecast of 2.0%. The OECD cut its 2026 US inflation forecast -0.1 to 3.6% from a June forecast of 3.7%.
US MBA mortgage applications fell -1.5% in the week ended September 18, with the purchase mortgage sub-index down -0.8% and the refinancing mortgage sub-index down -2.6%. The average 30-year fixed-rate mortgage rose +15 bp to a 2.25-year high of 7.12% from 6.97% in the prior week.
Nov WTI crude oil prices (CLX26) recovered from overnight losses and climbed more than +1% as the US and Iran remain at odds over key issues, including control over the Strait of Hormuz. Also, US Secretary of State Rubio said that Iran fired at commercial ships on Wednesday in the Strait of Hormuz and that peace talks with Iran are being impeded by Iran's Revolutionary Guard leaders. Iranian President Pezeshkian said on Wednesday that Iran won’t allow freedom of navigation through the Strait of Hormuz while sanctions and a US blockade remain in place.
Markets are discounting a 69% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets settled lower on Wednesday. The Euro Stoxx 50 fell from a 2-week high and closed down -0.39%. China's Shanghai Composite closed down -0.39%. Japan's Nikkei-225 Stock Average did not trade on Wednesday, with Japanese markets closed for the Autumnal Equinox Day holiday.
Interest Rates
December 10-year T-notes (ZNZ6) closed down by -31 ticks on Wednesday. The 10-year T-note yield rose +14.3 bp to 5.104%. Dec T-notes retreated today and plummeted to a 19-year nearest-futures low, and the 10-year T-note yield surged to a 19-year high of 5.133%. T-notes sank on Wednesday after WTI crude oil prices erased an overnight decline and turned higher, raising inflation expectations.
Losses in T-notes accelerated on Wednesday after the US Sep S&P manufacturing PMI unexpectedly rose to a 4.25-year high, which boosted the odds of a Fed rate hike at next month’s FOMC meeting to 69% from 53% on Tuesday. T-notes fell to their lows Wednesday afternoon on weak demand for the Treasury’s $70 billion auction of 5-year T-notes that had a bid-to-cover ratio of 2.21, well below the 10-auction average of 2.34 and the lowest in 7.75-years.
European government bond yields moved higher on Wednesday. The 10-year German bund yield rose +9.2 bp to 3.555%. The 10-year UK gilt yield rose +10.8 bp to 5.347%.
The Eurozone Sep S&P manufacturing PMI was unchanged at 52.7, stronger than expectations of a decline to 52.6.
The Eurozone Sep S&P composite PMI unexpectedly rose +1.1 to 53.1, stronger than expectations of a decline to 51.7 and the fastest pace of expansion in 3.25 years.
ECB Governing Council member and Bundesbank President Joachim Nagel said Eurozone inflation is above 3% and is projected to stay above the ECB's 2% goal for another year. Therefore, the ECB may have to raise interest rates to a level at which they hold back economic growth.
The OECD raised its 2026 Eurozone GDP forecast by +0.2 to 1.0% from a June forecast of 0.8%. The OECD also raised its 2026 Eurozone inflation forecast by +0.2 to 3.0% from a June forecast of 2.8%.
Markets are discounting a 60% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI stocks were under pressure on Wednesday and weighed on the overall market. The iShares Semiconductor ETF (SOXX) closed down more than -1%. SanDisk (SNDK) closed down more than -4%, and Broadcom (AVGO) and Micron Technology (MU) closed down more than -2%. Also, Intel (INTC), Lam Research (LRCX), ARM Holdings Plc (ARM), Advanced Micro Devices (AMD), Nvidia (NVDA), Analog Devices (ADI), and NXP Semiconductors NV (NXPI) closed down more than -1%.
Airlines and cruise line operators retreated on Wednesday after WTI crude oil rose more than +1%, raising fuel costs and dampening the profitability prospects of the companies. Alaska Air Group (ALK) closed down more than -5%, and United Airlines Holdings (UAL) closed down more than -3%. Also, Delta Air Lines (DAL), Southwest Airlines (LUV), Royal Caribbean Cruises (RCL), and Carnival (CCL) closed down more than -2%, and American Airlines Group (AAL) closed down more than -1%.
Home builders and building suppliers fell on Wednesday after the 10-year T-note yield rose to a 19-year high, which will boost mortgage rates and weigh on housing demand. DR Horton (DHI), Pulte Group (PHM), KB Home (KBH), Builders Firstsource (BLDR), and Home Depot (HD) closed down more than -2%, and Lennar (LEN) and Toll Brothers (TOL) closed down more than -1%.
Most cybersecurity stocks rallied on Wednesday. Palo Alto Networks (PANW) closed up +5% to lead gainers in the S&P 500 and Nasdaq 100, and Crowdstrike Holdings (CRWD) and Okta (OKTA) closed up more than +4%. Also, Zscaler (ZS) and Fortinet (FTNT) closed up more than 2%, and SentinelOne (S) closed up more than +1%.
Software stocks rose on Wednesday, a supportive factor for the broader market. Palantir Technologies (PLTR) and Atlassian Corp (TEAM) closed up more than +3%, and Cadence Design Systems (CDNS), ServiceNow (NOW), Thomson Reuters (TRI), and Workday (WDAY) closed up more than +2%. In addition, Datadog (DDOG) and Adobe Systems (ADBE) closed up more than +1%, and Salesforce (CRM) closed up more than +1% to lead gainers in the Dow Jones industrials.
Energy stocks and service providers moved higher on Wednesday as WTI crude oil rose more than +1%. APA Corp (APA) closed up more than +3%, and ConocoPhillips (COP) and Devon Energy (DVN) closed up more than +2%. Also, Occidental Petroleum (OXY), Chevron (CVX), ExxonMobil Holdings (XOM), and Baker Hughes (BKR) closed up more than +1%.
Voyager Technologies (VOYG) closed down more than -14% after announcing its intention to offer $350 million of convertible senior notes in a private offering.
Paychex (PAYX) closed down more than -8% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q1 management solutions revenue of $1.21 billion, weaker than the consensus of $1.23 billion.
McDonald’s (MCD) closed down more than -4% to lead losers in the Dow Jones Industrials after announcing it will spend up to $8.5 billion to help franchises serve better food and improve service.
IonQ (IONQ) closed up more than +4% after announcing that it developed the industry’s first end-to-end real-time quantum error correction decoder that runs on a single standard central processing unit.
Earnings Reports (9/24/2026)
Costco Wholesale Corp (COST), Darden Restaurants Inc (DRI), NexPoint Diversified Real Estate Trust (NXDT), Scholastic Corp (SCHL), TD SYNNEX Corp (SNX).
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.