As of 8:30am CT on Thursday, September 24, the mood on Wall Street felt like that moment when the weather forecast flips. S&P 500 futures were down 0.6%, Nasdaq 100 futures were off 1.1%, and Dow futures had slid 164 points, or about 0.3%, pointing to a lower open as investors kept retreating from the record highs set earlier this week.
The story is the same one that has been haunting the market all week, only louder. Borrowing costs keep climbing. The 10-year Treasury yield pushed past 5.12%, building on Wednesday’s close at 5.113%, its highest since July 2007. The 30-year yield touched 5.42%, its highest level since 2004. And traders are now pricing a roughly 75% chance the Federal Reserve raises rates again next month, up from 55% just a week ago, according to CME’s FedWatch tool.
What pushed yields higher this time? Wednesday brought a triple hit: business activity in September accelerated at its fastest pace since July 2021, according to S&P Global’s data, energy prices were fanning inflation fears, and a five-year Treasury auction was met with weak demand, triggering a fresh round of bond selling (Reuters). Fed Governor Michael Barr added to the fire Wednesday, saying further rate increases are likely needed to bring inflation down in a timely fashion (Wall Street Journal).
Wednesday’s regular session was ugly. The S&P 500 tumbled 0.75% to 7,706.03, the Dow fell 0.68% to 51,511.59, the Nasdaq dropped 1.13% to 26,936.04, and the Russell 2000 sank 1.77%.
Overnight in Asia, the one bright spot was Japan. The Nikkei 225 rose 1.8% to 66,189.99 on its first trading day after a three-day holiday, with chip-related names playing catch-up to the AI momentum: Ibiden surged 14%, SoftBank Group climbed 7%, and Kioxia gained 3.7%. But the rest of the region sagged. The Shanghai Composite fell 48 points to 3,888 and Hong Kong’s Hang Seng dropped 72 points to 24,761, despite early optimism around President Xi’s state visit to Washington and a two-month extension of the U.S.-China trade truce to January 10. Australia’s ASX 200 retreated on weak jobs data that saw the unemployment rate rise to a five-year high. South Korea was closed for the Chuseok holiday.
Europe opened in the red. The Stoxx Europe 600 dropped 0.4%, Germany’s DAX slipped 0.5%, London’s FTSE 100 fell 0.3%, and France’s CAC 40 lost 0.4%, with banks and tech leading the slide. BNP Paribas fell 4.3% in Paris, BMW lost 2.6% in Frankfurt, and Standard Life dropped 4.4% in London.
The commodity corners told the same inflation story. Brent crude stayed above $100 a barrel, WTI was up about 1% to near $93. Gold futures were down nearly 1% to $4,290 an ounce, pressured by a strong dollar, and Bitcoin traded at $83,500, below its recent high of $87,400. The dollar index held near a two-month high of 101.1, pushing the euro to $1.1378 and sterling toward a three-month low of $1.3231 (Reuters).
In premarket trading, the pain was spreading. Airlines and cruise operators, sensitive to energy prices, ticked down, with JetBlue and United losing more than 1% each. The AI winners that carried the Nasdaq to records earlier this week were giving back gains: Meta and Nvidia fell about 2% and 1% respectively, while Marvell and Intel slid roughly 3% each.
Why it matters: the market’s big question has flipped from “when will the Fed cut?” to “how many more hikes are coming?” As GDS Wealth Management’s Glen Smith put it, stocks survived a near-5% yield back in 2023, and “the same holds true now” (Barron’s). But the worry creeping into prices is that this time, oil and tariffs make the inflation problem stickier.
What to watch next: today’s Trump-Xi summit in Washington, a full slate of economic data, and four Fed speakers who will either calm or feed the rate-hike repricing. U.S. markets open at 9:30am ET.
