Oil prices rose almost 4 percent and the S&P 500 energy sector index rallied after Iranian President Masoud Pezeshkian’s speech at the UN, a day after US President Donald Trump warned he could “annihilate” Iran.
A survey showed US business activity raced to a more than five-year high in September, pushing government bond yields higher and raising expectations the Federal Reserve will increase interest rates at its October meeting.
Yields on 2-year Treasuries touched their highest since 2024, while 10-year Treasury yields hit their highest since 2007.
“The stock market wants a resolution to the (Middle East) conflict, and if we don’t get that, we will have higher rates for longer, and that’s going to continue to weigh on the equity market,” said Lauren Cassidy, chief investment officer at Founders 100 ETF in Dallas.
Meta Platforms rose 1 percent, bringing its gain this week to 12 percent following a strong reception of its “Muse” AI assistant, which analysts say could benefit tech infrastructure stocks, while challenging banks, online shopping platforms and other consumer businesses.
Google parent Alphabet fell 3.8 percent. Amazon, which has blocked Muse from its shopping platform, dropped 2.2 percent.
The PHLX chip index dropped 1.2 percent, with Nvidia down 1.5 percent. Expedia and Airbnb both fell more than 7 percent.
The Nasdaq recorded record-high closes in the previous two sessions as Wall Street remained optimistic about AI-related companies. The S&P 500 is less than 2 percent below its record high close on August 13.
Investors are also looking ahead to a summit between US leader Donald Trump and President Xi Jinping in Washington, where tensions over trade, technology and Tehran are expected to play out against a backdrop of pomp and ceremony.
The S&P 500 declined 0.8 percent to end the session at 7,706 points. The Nasdaq declined 1.1 percent to 26,936 points, while the Dow Jones Industrial Average declined 0.7 percent to 51,511 points.
Markets also parsed comments from Federal Reserve Governor Michael Barr, who said the central bank will likely need to deliver further interest rate hikes as inflation remains north of the Fed’s 2 percent target.
Traders are now pricing in a 71 percent chance that the Fed will raise interest rates at its policy meeting next month, the CME Group’s FedWatch Tool showed. (Reuters)
