The S&P 500 Index SPY closed down by -0.47% on Thursday, the Dow Jones Industrial Average DIA closed up by +0.10%, and the Nasdaq 100 Index QQQ closed down -1.39%. December E-mini S&P futures (ESZ26) fell -0.41%, and December E-mini Nasdaq futures (NQZ26) fell -1.31%.
Stock indexes settled mixed on Thursday as a surge in crude oil raised inflation risks, dampened market sentiment, and weighed on the broader market. WTI crude oil rose more than +3% on Thursday after a report said the US could escalate the war in Iran before next month's midterm elections.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.Also, chipmakers and AI-infrastructure stocks were hammered Thursday amid demand concerns after the Financial Times reported that OpenAI is on track to generate annualized revenue of roughly $50 billion based on its current performance, below last month's reports that the company was on track to generate nearly $70 billion.
Hawkish Fed comments on Thursday also weighed on stocks and bonds. Fed Governor Christopher Waller said, "If the economic data continue to come in as expected, I anticipate additional rate hikes to support a timelier return of inflation to our 2% goal." Also, St. Louis Fed President Alberto Musalem signaled more Fed rate hikes ahead, saying, "To bring inflation back to target in a timely manner, more monetary policy firming will be required."
Thursday’s US economic news showed labor market strength that supported stocks after weekly initial unemployment claims unexpectedly fell by -2,000 to a 2.5-month low of 197,000, showing a stronger labor market than expectations of an increase to 200,000. Strength in energy producers on Thursday also helped the broader market.
Earnings optimism is a bullish factor for stock prices. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 profits are expected to climb by +25% from a year earlier, up from a July estimate of 22%. Q3 earnings season begins next week when US money center banks report.
Nov WTI crude oil prices (CLX26) rose more than 3% Thursday on signs of a possible escalation of the US-Iran conflict after an Atlantic report said the White House asked the Pentagon to draw up strike options against Iran that could be executed before the midterm elections. Also, due to Iranian attacks on shipping in the Strait of Hormuz, the cost to ship oil out of the Middle East is soaring, with freight rates from the Middle East to China jumping to $1.4 million a day, the most on record. In addition, crude oil has support as US crude producers shut in more than 1.28 million bpd of crude output, or 63% of Gulf output, in response to Hurricane Isaias forming in the US Gulf. However, crude prices fell from their highs Thursday afternoon after President Trump said the US would not attack Iran ahead of next month’s midterm elections, citing “productive discussions” with Iran.
Markets are discounting a 17% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets settled lower on Thursday. The Euro Stoxx 50 tumbled to a 3.75-month low and closed down -0.87%. China's Shanghai Composite fell to a 2-month low and closed down -0.79%. Japan's Nikkei-225 Stock Average closed down -1.42%.
December 10-year T-notes (ZNZ6) closed up by +7.5 ticks on Thursday. The 10-year T-note yield fell -5.9 bp to 5.225%. T-notes recovered from early losses on Thursday and settled higher after crude oil prices came off their highs when President Trump said he’d hold off on attacking Iran until after the US midterm elections. Gains in T-notes accelerated Thursday afternoon as strong demand for the Treasury’s $22 auction of 30-year T-bons sparked short covering in T-notes. The bid-to-cover ratio on the auction was 2.54, stronger than the 10-auction average of 2.44.
T-notes initially moved lower on Thursday after a +3% jump in WTI crude oil prices raised inflation expectations. Hawkish Fed comments on Thursday also weighed on T-notes after Fed Governor Christopher Waller and St. Louis Fed President Alberto Musalem signaled additional rate hikes. In addition, Thursday’s unexpected decline in US weekly jobless claims to a 2.5-month low points to a strong labor market, a hawkish factor for Fed policy.
European government bond yields moved higher on Thursday. The 10-year German bund yield rose +2.0 bp to 3.495%. The 10-year UK gilt yield climbed to a 19-year high of 5.521% and finished up +3.8 bp to 5.481%.
The summary of the September 9-10 ECB meeting showed officials warning that further action on inflation is needed, while also assessing that any interest rate increase would still not restrict growth.
The German Economy Ministry raised its 2026 German GDP forecast to 1.3% from a previous estimate of 0.5%.
German trade news was weaker than expected after German Aug exports unexpectedly fell -0.8% m/m, weaker than expectations of+0.9% m/m and the biggest decline in 9 months. Aug imports rose +0.9% m/M, weaker than expectations of +2.8% m/m.
Markets are discounting a 13% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
Chipmakers and AI-infrastructure stocks sold off on Thursday, weighing on the broader market. Coherent COHR closed down more than -9% to lead losers in the S&P 500, and Astera Labs ALAB closed down more than -9% to lead losers in the Nasdaq 100. Also, ARM Holdings Plc ARM closed down more than -6%, and Intel INTC closed down more than -5%. In addition, Sandisk SNDK, Micron Technology MU, Broadcom AVGO ,and Seagate Technology Holdings Plc STX closed down more than -4%, and Advanced Micro Devices AMD, Marvell Technology MRVL, and Microchip Technology MCHP closed down more than -3%. Finally, Nvidia NVDA closed down more than -2% to lead losers in the Dow Jones Industrials.
Cryptocurrency-exposed stocks retreated on Thursday after Bitcoin RIOT closed down more than -9%, and Iren Ltd IREN closed down more than -7%. Also, Galaxy Digital Holdings GLXY closed down more than -6%, and MARA Holdings MARA closed down more than -4%. In addition, Coinbase Global COIN closed down more than -3%, and Robinhood Markets and BitMine Immersion Technologies BMNR closed down more than -2%.
Energy producers and service providers are climbing today, with WTI crude oil up more than +4%. Marathon Petroleum MPC and Valero Energy VLO closed up more than +4%, and Diamondback Energy FANG closed up more than +3% to lead gainers in the Nasdaq 100. Also, Chevron CVX, APA Corp APA, ConocoPhillips COP, Occidental Petroleum OXY, and Phillips 66 PSX closed up more than +3%, and Devon Energy DVN, ExxonMobil Holdings XOM, Halliburton HAL, and SLB Ltd SLB closed up more than +2%.
Nova Ltd NVMI closed down more than -6% after Citigroup downgraded the stock to neutral from buy.
Universal Display OLED closed down more than -5% after Citigroup downgraded the stock to sell from neutral with a price target of $71.
Levi Strauss & Co LEVI closed down more than -2% after reporting Q3 net revenue of $1.61 billion, below the consensus of $1.62 billion.
Haemonetics HAE closed up more than +17% after CSL Plasma expanded its relationship with the company and said it will complete the rollout of Haemonetics’ latest generation plasmapheresis platform across its US plasma centers by the end of 2027.
Chipotle Mexican Grill CMG closed up more than +6% after the Financial Times reported that Starbucks is exploring a takeover of the company.
Accenture Plc ACN closed up more than +5% after forming the Accenture Dell Business Group with Dell Technologies, designed to help organizations scale AI and modernize infrastructure.
Palantir Technologies PLTR closed up more than +2% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $230.
Delta Air Lines Inc (DAL), Hingham Institution For Savings (HIFS), Nurix Therapeutics Inc (NRIX).
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.
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