The S&P 500 Index (PX) (SPY) on Thursday closed down 0.50%, the Dow Jones Industrials Index (OWI) (DIA) closed down 0.38%, and the Nasdaq 100 Index (UXX) (QQQ) closed down 0.43%. December E-mini S&P futures (ESZ25) fell 0.48%, and December E-mini Nasdaq futures (NQZ25) fell 0.47%.
Stock indexes were under pressure on Thursday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 all falling to one-week lows. Stocks retreated for the third consecutive session as rising bond yields undercut stock prices.
Signs that the US economy is stronger than expected pushed Treasury note yields higher following the release of better-than-expected US GDP, jobless claims, and core capital goods orders reports. The 10-year Treasury note yield posted a three-week high, finishing up 2 basis points at 4.17%.
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**Economic Data Highlights**
– The US Q2 GDP was revised upward to +3.8% (quarter-over-quarter annualized), stronger than the initial estimate of +3.3%.
– Q2 personal consumption was revised upward to +2.5%, exceeding expectations of +1.7%.
– The Q2 core PCE price index was unexpectedly revised upward to +2.6%, versus prior expectations of 2.5%.
– US weekly initial unemployment claims fell by 14,000 to a two-month low of 218,000, showing a stronger labor market than the expected increase to 233,000.
– August core capital goods new orders (excluding defense and aircraft), a proxy for capital spending, rose 0.6% month-over-month, beating expectations of no change.
– August existing home sales fell 0.2% month-over-month to 4.00 million, slightly better than the expected 3.95 million.
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**Fed Comments and Market Implications**
Kansas City Fed President Jeff Schmid signaled that the Federal Reserve may not need to lower interest rates again soon. He remarked that the current stance of Fed policy is “slightly restrictive,” which he believes is appropriate as inflation remains too high while the labor market, though cooling, still remains largely balanced.
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**Cryptocurrency and Market Risks**
The price of Bitcoin (^BTCUSD) fell more than 3% to a three-week low ahead of the expiration of monthly options. More than $17 billion in notional open interest tied to Bitcoin is set to expire on Friday, according to derivatives exchange Deribit.
Another potential bearish factor for stocks is the looming possibility of a US government shutdown on October 1 if lawmakers fail to pass a spending bill. The White House issued a memo on Wednesday warning that a shutdown would trigger widespread dismissals of employees in government programs that don’t align with President Trump’s priorities.
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**Corporate Earnings Outlook**
On a more positive note, rising corporate earnings expectations provide a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of S&P 500 companies have provided guidance indicating that their Q3 earnings results are expected to beat analysts’ estimates—the highest percentage in a year.
S&P companies are projected to post 6.9% earnings growth in Q3, up slightly from 6.7% as of the end of May.
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**Upcoming Market Focus**
This week, markets will be paying close attention to any fresh trade or tariff news. On Friday, August personal spending is expected to increase by 0.5% month-over-month and personal income by 0.3% month-over-month.
Additionally, the August core PCE price index—the Fed’s preferred inflation gauge—is expected to rise 0.2% month-over-month and 2.9% year-over-year. The University of Michigan’s September US consumer sentiment index is forecasted to remain unchanged at 55.4.
Markets currently price in an 86% chance of a 25 basis point rate cut at the next Federal Open Market Committee (FOMC) meeting scheduled for October 28-29.
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**Overseas Markets and Interest Rates**
Overseas stock markets on Thursday settled mixed:
– The Euro Stoxx 50 closed down 0.36%.
– China’s Shanghai Composite closed down 0.01%.
– Japan’s Nikkei Stock 225 closed up 0.27%.
In the bond market, December 10-year Treasury notes (ZNZ5) closed down 10 ticks. The 10-year Treasury note yield rose 2.1 basis points to 4.168%, climbing to a three-week high of 4.199% earlier in the session.
Stronger-than-expected US economic reports were hawkish for Fed policy and bearish for T-notes. Hawkish comments from Kansas City Fed President Schmid also weighed on T-notes, signaling that further rate cuts may not be imminent.
Demand was weak at the $44 billion auction of 7-year T-notes, which had a bid-to-cover ratio of 2.40—the lowest in 2.5 years and below the 10-auction average of 2.63.
European government bond yields also moved higher. The 10-year German bund yield rose 2.6 basis points to 2.773%, a three-week high. The 10-year UK gilt yield climbed 8.8 basis points to 4.757%, also a three-week high.
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**Eurozone Economic Data**
– August new car registrations rose 5.3% year-over-year to 678,000 units.
– August M3 money supply rose 2.9% year-over-year, weaker than the expected 3.3%, marking the slowest pace of increase on a year.
– The German October GfK consumer confidence survey improved by 1.2 points to -22.3, better than expectations of -23.3.
Swaps are discounting only a 1% chance for a 25 basis point rate cut by the European Central Bank (ECB) at its October 30 policy meeting.
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**US Stock Movers**
The weakness in chip stocks on Thursday weighed on the overall market:
– Micron Technology (MU) closed down more than 3%.
– ARM Holdings Plc (ARM) and ON Semiconductor (ON) both closed down more than 2%.
– Microchip Technology (MCHP), Broadcom (AVGO), Qualcomm (QCOM), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) all declined more than 1%.
Cryptocurrency-exposed stocks also faced pressure amid Bitcoin’s decline. Strategy (MSTR) led the Nasdaq 100 losers, down more than 7%. Other cryptocurrency-linked stocks like Coinbase Global (COIN), Bit Digital (BTBT), Galaxy Digital (GLXY), MARA Holdings (MARA), and Riot Platforms (RIOT) closed down more than 4%.
CarMax (KMX) was the biggest loser in the S&P 500, closing down more than 20% after reporting Q2 net sales and operating revenue of $6.59 billion—well below consensus estimates of $7.01 billion.
Oklo Inc (OKLO) dropped more than 8% after Goldman Sachs initiated coverage with a neutral rating and a price target of $117.
Jabil (JBL) fell more than 6% despite posting better-than-expected Q4 net revenue, as Vital Knowledge highlighted margin pressures in its AI-exposed Intelligent Infrastructure segment.
Freeport-McMoRan (FCX) declined more than 6%, adding to Wednesday’s 16% plunge after declaring force majeure on contracted copper supplies and suspending operations at its Grasberg mine in Indonesia following a deadly mudslide.
Oracle (ORCL) closed down more than 5% after Rothschild & Co Redburn initiated coverage with a sell recommendation and a price target of $175.
Tesla (TSLA) fell more than 4% after reporting European August car sales down 22%, giving it a market share of only 1.9%.
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**Notable Gainers**
Lithium Americas (LAC) surged more than 22%, adding to Wednesday’s 96% jump following reports that the Trump administration is pursuing a stake in the company. Lithium producer Albemarle (ALB) also gained more than 4% on the news.
Intel (INTC) rose more than 8%, leading gainers in the S&P 500 and Nasdaq 100 after reports that the company approached Apple about securing an investment.
International Business Machines (IBM) climbed more than 5%, leading gainers in the Dow Jones Industrials, after HSBC Holdings Plc announced a breakthrough in deploying quantum computing in financial markets using IBM’s Heron quantum processor to improve bond price predictions.
Marvell Technology (MRVL) rose more than 4% on insider buying, with CEO Murphy purchasing $1.05 million of shares on Thursday.
United Natural Foods (UNFI) increased more than 3% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $36.
CME Group (CME) gained more than 1% following an upgrade to buy from neutral by Citigroup, with a price target of $300.
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**Earnings Reports (September 26, 2025)**
– Compass Diversified Holdings (CODI)
– Immersion Corp (IMMR)
– Mercurity Fintech Holding Inc (MFH)
– Triller Group Inc (ILLR)
– XCF Global Inc (SAFX)
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**Disclosure**
On the date of publication, Rich Asplund did not hold (directly or indirectly) positions in any of the securities mentioned in this article. All information and data are for informational purposes only. For more details, please view the Barchart Disclosure Policy.
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*The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.*
https://www.nasdaq.com/articles/stocks-decline-bond-yields-push-higher
