Bond Market Turmoil Sparks Global Stock Swings; AI Optimism Lifts Wall Street

Global stock markets saw sharp contrasts on Thursday as bond yield volatility rattled investors. Wall Street indices held modest gains after U.S. Treasury yields surged then eased, with the S&P 500 rising 0.3%, the Dow Jones Industrial Average virtually unchanged, and the Nasdaq composite up 0.3%. In Europe, the moves were far more severe: London’s FTSE 100 fell 1.7%, Paris’s CAC 40 dropped 1.6%, and Frankfurt’s DAX lost 1%, battered by wild swings in government bond yields. France’s 10-year yield, for instance, gyrated from nearly 4.95% down to 4.80% and back to 4.90%.

The turbulence underscores the punishing sensitivity of bond markets, where shifts of hundredths of a percentage point matter. High yields raise borrowing costs and pressure stock valuations, while also pulling investors away from dividend-paying real estate stocks. BXP fell 1.6% and Alexandria Real Estate Equities dropped 2.2%.

Yields climbed on concerns over persistent inflation, elevated oil prices, a resilient U.S. economy, and large government deficits. Brent crude jumped 4.3% to $102.24 a barrel amid uncertainty over the Iran conflict. Jobless claims fell, signaling fewer layoffs, and U.S. manufacturing expanded in September, though input-price pressures accelerated, hinting at further inflation. The 10-year Treasury yield spiked to 5.34%, its highest since 2002, before retreating to 5.23%, which helped Wall Street recover.

Amid the gloom, AI optimism provided a counterweight. Micron Technology’s better-than-expected profit and upbeat AI-driven forecasts lifted its stock 1.7%, adding to a nearly 280% year-to-date gain. Nvidia rose 1.6%, Applied Materials gained 3.8%, and Accenture surged 17% on strong quarterly results. Asian markets benefited from the tech rally, with Japan’s Nikkei 225 jumping 3.3% and South Korea’s Kospi climbing 1.9%.

AP Business Writers Yuri Kageyama and Michelle Chapman contributed to this report. Stan Choe, The Associated Press

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