Stocks Fall as 10-Year Treasury Yield Surges to 2.75-Year High

U.S. stock indexes declined, with the S&P 500 Index ($SPX) (SPY) down 0.42%, the Dow Jones Industrial Average ($DOWI) (DIA) down 0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) down 0.69%. E-mini S&P futures (ESU26) were 0.40% lower, while September E-mini Nasdaq futures (NQU26) were 0.65% lower.

Stock indexes came under pressure as the S&P 500 and Dow Jones Industrial Average fell to five-week lows. Surging energy prices lifted global bond yields, adding pressure to equities. WTI crude oil advanced more than 3% to a 3.5-month high amid concerns that the U.S.-Iran conflict would continue, heightening inflation risks and raising the possibility that central banks worldwide would keep increasing interest rates. The yield on the 10-year U.K. gilt rose to a 19-year high of 5.36%, the 10-year German bund yield reached a 15-year high of 3.50%, and the 10-year U.S. Treasury note yield climbed to a 2.75-year high of 4.93%.

Stocks extended their losses after U.S. August producer price data came in above expectations, indicating persistent inflation, while weekly jobless claims remained low, pointing to strength in the labor market.

U.S. initial unemployment claims fell by 1,000 to 206,000, near expectations of 205,000, suggesting a stable labor market.

The U.S. producer price index for final demand rose 5.4% year over year in August, above expectations of 5.3%. Excluding food and energy, the index increased 4.6% from a year earlier, matching forecasts.

U.S. existing-home sales declined 2.0% month over month in August to 3.98 million, in line with expectations and marking a 14-month low.

The escalating trade dispute between the U.S. and Canada is also weighing on investor sentiment. On Tuesday, Canada imposed tariffs of 15% to 50% on hundreds of U.S. products in retaliation for Washington’s move last month to impose 50% tariffs on $20 billion of imports from Canada. The U.S. responded by seeking to block certain Canadian products, imposing new tariffs on others, and attempting to prevent Canadian companies from selling to U.S. government contractors.

October WTI crude oil futures (CLV26) rose more than 3% to a 3.5-month high. Crude prices climbed after Iran said it was prepared for a more intense conflict and would escalate counterstrikes if U.S. attacks on its territory and infrastructure continued. A prolonged dispute that disrupts Middle Eastern crude supplies is supporting oil prices. They gained further after Saudi Arabia told OPEC that its August production fell to 6.238 million barrels per day, the lowest level since 1990.

Markets are pricing in a 72% probability of a 25-basis-point rate increase at the next Federal Open Market Committee meeting on September 15-16.

Overseas stock markets were mixed. The Euro Stoxx 50 fell 0.42% to a six-week low, China’s Shanghai Composite closed down 0.43%, and Japan’s Nikkei 225 gained 0.20%.

Interest Rates

December 10-year Treasury note futures (ZNZ6) fell 17 ticks. The 10-year Treasury yield rose 7.3 basis points to 4.914%. T-notes dropped to a 2.75-year low in the nearest futures contract, pushing the 10-year yield to a 2.75-year high of 4.928%. Higher crude prices, which are lifting inflation expectations, are pressuring T-notes. WTI crude is up more than 3% to a 3.5-month high, raising the 10-year breakeven inflation rate to a 3.25-month high of 2.408%. Treasury supply is also weighing on the market ahead of today’s $22 billion auction of 30-year bonds. T-notes declined further after August PPI data exceeded expectations.

European government bond yields moved higher. The 10-year German bund yield rose 4.8 basis points to 3.492%, reaching a new 15-year high after touching 3.495%. The 10-year U.K. gilt yield increased 9.7 basis points to 5.358%, also reaching a 19-year high after hitting 5.362%.

The European Central Bank raised its deposit facility rate by 25 basis points to 2.50%, as expected, and said inflation would remain above 2% for an “extended period.”

The ECB lifted its 2026 Eurozone GDP forecast to 0.9% from 0.8% and left its forecast for 2026 core inflation unchanged at 2.5%.

Markets are assigning a 77% probability to a 25-basis-point ECB rate increase at its next meeting on October 29.

U.S. Stock Movers

Chipmakers and AI infrastructure stocks declined, pressuring the broader market. CoreWeave (CRWV), Intel (INTC), and Lam Research (LRCX) fell more than 4%, while Micron Technology (MU), SanDisk (SNDK), and Western Digital (WDC) dropped more than 3%. ARM Holdings (ARM), Advanced Micro Devices (AMD), and Applied Materials (AMAT) also declined by more than 2%, and Nvidia (NVDA) lost more than 2% to lead losses in the Dow Jones Industrial Average.

Copper-producing shares declined after copper prices fell more than 4%. Reuters reported that the White House has not yet decided whether to impose tariffs on refined copper as it weighs higher manufacturing costs against the potential benefits of encouraging domestic mining. Freeport-McMoRan (FCX) dropped more than 7%, and Southern Copper (SCCO) fell more than 6%. Rio Tinto (RIO) declined more than 4%, while Newmont (NEM) lost more than 2%.

Home builders and suppliers retreated after the 10-year Treasury yield surged to a 2.75-year high, lifting mortgage rates and weighing on housing demand. Lennar (LEN) fell more than 4%, while DR Horton (DHI), PulteGroup (PHM), KB Home (KBH), and Builders FirstSource (BLDR) declined more than 3%. Toll Brothers (TOL) also lost more than 2%.

AeroVironment (AVAV) rose more than 10% to lead drone makers higher after reporting first-quarter revenue of $480.5 million, above the consensus estimate of $455.8 million. Red Cat Holdings (RCAT) gained more than 3%, while Defiance Drone and Modern Warfare ETF (JEDI), Aevex (AVEX), Unusual Machines (UMAC), and Kratos Defense & Security Solutions (KTOS) advanced more than 2%.

Cybersecurity stocks climbed, providing support for the broader market. Fortinet (FTNT) and Okta (OKTA) gained more than 2%, while CrowdStrike Holdings (CRWD), Palo Alto Networks (PANW), and SentinelOne (S) rose more than 1%.

American Eagle Outfitters (AEO) fell more than 14% after reporting a 6.00% increase in second-quarter comparable sales, below the consensus estimate of 6.47%.

The Cooper Companies (COO) dropped more than 13% to lead S&P 500 losers after third-quarter net sales of $1.07 billion missed the consensus estimate of $1.10 billion. The company also reduced its full-year revenue outlook to $4.23 billion-$4.25 billion from $4.29 billion-$4.32 billion, below the consensus estimate of $4.31 billion.

Driven Brands Holdings (DRVN) declined more than 3% after Bank of America Global Research downgraded the stock to underperform from buy and set a $12 price target.

Kymera Therapeutics (KYMR) gained more than 1% after Wolfe Research upgraded the stock to outperform from peer perform and established an $180 price target.

Earnings Reports (9/10/2026)

Companies scheduled to report earnings on 9/10/2026 include Adobe (ADBE), Copart (CPRT), Macy’s (M), and Oracle (ORCL).

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