Pressure from Strong Economy and the Fed
On Thursday, US stock indexes closed lower: the S&P 500 fell by 0.50%, the Dow Jones by 0.38%, and the Nasdaq 100 by 0.43%. All three benchmarks hit one-week lows, marking the third straight day of declines. The main driver was the rise in 10-year US Treasury yields to a three-week high of 4.17%. Investors reacted to upward revisions in GDP, consumer spending, and core PCE inflation, as well as to weekly jobless claims, which dropped to a two-month low.
Macroeconomic Data and Fed Stance
Q2 GDP was revised up to +3.8% annualized versus +3.3% expected. Consumer spending rose +2.5%, while the core PCE index was revised to +2.6% from +2.5%. These figures confirmed the resilience of the US economy and pushed yields higher. Kansas City Fed President Jeff Schmid noted that monetary policy remains “slightly restrictive” and suggested there is no urgent need to cut interest rates.
Additional Headwinds
The market also felt pressure from Bitcoin, which dropped over 3% to a three-week low. More than $17 billion in Bitcoin options are set to expire on Friday, fueling volatility. Crypto-related stocks followed suit: MicroStrategy fell more than 7%, while Coinbase lost over 4%. Meanwhile, the risk of a potential US government shutdown on October 1, if no budget deal is reached, added to uncertainty.
Corporate Highlights
CarMax plunged 20% after disappointing earnings, Freeport-McMoRan fell 6% after declaring force majeure in Indonesia, Oracle dropped 5% on a bearish analyst call, and Tesla slipped 4% on weaker European sales.
On the upside, Lithium Americas surged 22% on reports of possible Trump administration investments. Intel jumped 8% amid talks with Apple, IBM rose 5% on progress in quantum computing, and Marvell Technology climbed 4% after insider buying.
Global Markets and Bonds
European markets closed mixed: the Euro Stoxx 50 fell 0.36%, while Japan’s Nikkei 225 gained 0.27%. The 10-year German bund yield rose to 2.77%, and UK gilt yields climbed to 4.76%, adding further pressure on equities.
Conclusion
US stocks remain under pressure from rising yields and Fed policy expectations. Strong macro data confirm economic resilience but reduce chances of an imminent rate cut. In the coming days, investors will focus on personal spending and the Fed’s preferred inflation gauge, the PCE index, which could set the tone for markets going forward.
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