The S&P 500 Index ($SPX) (SPY) on Thursday closed down -0.50%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.38%, and the Nasdaq 100 Index ($IUXX) (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 falling to 1-week lows. Stocks retreated for the third consecutive session on Thursday as rising bond yields undercut stock prices. Signs that the US economy is stronger than expected pushed T-note yields higher Thursday, following the release of better-than-expected US GDP, jobless claims, and core capital goods orders reports. The 10-year T-note yield on Thursday posted a 3-week high and finished up +2 bp to 4.17%.
US Q2 GDP was revised upward to +3.8% (q/q annualized), stronger than expectations of no change at +3.3%. Q2 personal consumption was revised upward to +2.5%, stronger than expectations of +1.7%. The Q2 core PCE price index was unexpectedly revised upward to +2.6%, versus expectations of no change at +2.5%.
US weekly initial unemployment claims fell by -14,000 to a 2-month low of 218,000, showing a stronger labor market than expectations of an increase to 233,000.
US Aug core (ex-defense and aircraft) capital goods new orders, a proxy for capital spending, rose +0.6% m/m, stronger than expectations of no change.
US Aug existing home sales fell -0.2% m/m to 4.00 million, stronger than expectations of 3.95 million.
Kansas City Fed President Jeff Schmid signaled the Fed may not need to lower interest rates again soon and said the current stance of Fed policy is “slightly restrictive, which I think is the right place to be as inflation remains too high while the labor market, though cooling, still remains largely in balance.”
The price of Bitcoin (^BTCUSD) fell by more than -3% to a 3-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 likelihood that the US government will shut down on October 1 if lawmakers fail to pass a spending bill by then. The White House issued a memo late Wednesday that said a shutdown would trigger widespread dismissals of employees in government programs that don’t align with President Trump’s priorities.
Rising corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 provided guidance for their Q3 earnings results that are expected to beat analysts’ expectations, the highest in a year. Also, S&P companies are expected to post +6.9% earnings growth in Q3, up from +6.7% as of the end of May.
The markets this week will focus on any fresh trade or tariff news. On Friday, Aug personal spending is expected to be up by +0.5% m/m and Aug personal income is expected to be up by +0.3% m/m. Also, the Aug core PCE price index, the Fed’s preferred inflation gauge, is expected to rise by +0.2% m/m and +2.9% y/y. Finally, the University of Michigan’s Sep US consumer sentiment index is expected to remain unchanged at 55.4.
The markets are pricing in an 86% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29.
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 +0.270%.
Interest Rates
December 10-year T-notes (ZNZ5) on Thursday closed down -10 ticks. The 10-year T-note yield rose +2.1 bp to 4.168%. Dec T-notes fell to a 3-week low Thursday, and the 10-year T-note yield climbed to a 3-week high of 4.199%. Thursday’s stronger-than-expected US economic reports were hawkish for Fed policy and bearish for T-notes. Also, hawkish comments on Thursday from Kansas City Fed President Jeff Schmid undercut T-notes when he signaled the Fed may not need to lower interest rates again soon. T-notes maintained their losses on weak demand for the Treasury’s $44 billion auction of 7-year T-notes that had a bid-to-cover ratio of 2.40, weaker than the 10-auction average of 2.63 and the lowest in 2.5 years.
European government bond yields on Thursday moved higher. The 10-year German bund yield rose to a 3-week high of 2.780% and finished up +2.6 bp at 2.773%. The 10-year UK gilt yield climbed to a 3-week high of 4.761% and finished up +8.8 bp to 4.757%.
Eurozone Aug new car registrations rose +5.3% y/y to 678,000 units.
Eurozone Aug M3 money supply rose +2.9% y/y, weaker than expectations of +3.3% y/y and the slowest pace of increase on a year.
The German Oct GfK consumer confidence survey rose +1.2 to -22.3, stronger than expectations of -23.3.
Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.
US Stock Movers
The weakness in chip stocks on Thursday was a bearish factor for the overall market. Micron Technology (MU) closed down more than -3%. Also, ARM Holdings Plc (ARM) and ON Semiconductor (ON) closed down more than -2%. In addition, Microchip Technology (MCHP), Broadcom (AVGO), Qualcomm (QCOM), NXP Semiconductors NV (NXPI), and Texas Instruments (TXN) closed down more than -1%.
Cryptocurrency-exposed stocks are under pressure today, with the price of Bitcoin down by more than -2% at a two-week low. As a result, Strategy (MSTR) closed down more than -7% to lead losers in the Nasdaq 100. Also, Coinbase Global (COIN), Bit Digital (BTBT), Galaxy Digital (GLXY), MARA Holdings (MARA), and Riot Platforms (RIOT) closed down more than -4%.
CarMax (KMX) closed down more than -20% to lead losers in the S&P 500 after reporting Q2 net sales and operating revenue of $6.59 billion, well below the consensus of $7.01 billion.
Oklo Inc (OKLO) closed down more than -8% after Goldman Sachs initiated coverage on the stock with a recommendation of neutral with a price target of $117.
JabiI (JBL) closed down more than -6% despite reporting better-than-expected Q4 net revenue after Vital Knowledge said the results show pressure on margins in its AI-exposed Intelligent Infrastructure segment.
Freeport-McMoRan (FCX) closed down more than -6%, adding to Wednesday’s -16% plunge after declaring force majeure on contracted copper supplies and suspending activity at its Grasberg mine in Indonesia following a deadly mudslide.
Oracle (ORCL) closed down more than -5% after Rothschild & Co Redburn initiated coverage on the stock with a sell recommendation and a price target of $175.
Tesla (TSLA) closed down more than -4% after its European Aug car sales fell -22%, giving it a market share of only 1.9%.
Lithium Americas (LAC) closed up more than +22%, adding to Wednesday’s +96% surge following reports that the Trump administration is pursuing a stake in the company. Lithium producer Albemarle (ALB) also closed up more than +4% on the news.
Intel (INTC) closed up more than +8% to lead gainers in the S&P 500 and Nasdaq 100 on a report that the company approached Apple about securing an investment in the company.
International Business Machines (IBM) is up more than +5% to lead gainers in the Dow Jones Industrials after HSBC Holdings Plc said it achieved a breakthrough in deploying quantum computing in financial markets, using IBM’s Heron quantum processor to improve bond price predictions.
Marvel Technology (MRVL) closed up more than +4% on signs of insider buying after an SEC filing showed CEO Murphy bought $1.05 million of shares on Thursday.
United Natural Foods (UNFI) closed up more than +3% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $36.
CME Group (CME) closed up more than +1% after Citigroup upgraded the stock to buy from neutral with a price target of $300.
Earnings Reports(9/26/2025)
Compass Diversified Holdings (CODI), Immersion Corp (IMMR), Mercurity Fintech Holding Inc (MFH), Triller Group Inc (ILLR), XCF Global Inc (SAFX).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
