S&P 500 ends down as Treasury yields rise and traders fret about inflation

The S&P 500 experienced a decline of 0.58% on Thursday, closing at 7,591.75 points. This downturn was attributed to producer price data from August and a surge in oil prices, which increased concerns about the Federal Reserve's potential interest rate hike next week. Additionally, rising Treasury yields made stocks less appealing.

Major chipmakers, such as Nvidia and Micron Technology, saw significant losses, with Nvidia down 2.3% and Micron Technology falling 4.7%. Apple, meanwhile, saw a 3.6% increase following its launch of a US$1,999 iPhone. Supply chain disruptions caused by the US-Israeli war on Iran further contributed to the rise in Brent crude, which jumped 6% to US$107 a barrel, adding to inflation worries and fueling expectations of a Fed rate hike at the upcoming policy meeting.

Treasury yields, particularly for the 10-year and 30-year notes, reached their highest levels in nearly three years and over 19 years, respectively. Analyst Ross Mayfield explained that higher yields are negative for equities, lowering valuations and increasing operating costs for businesses and consumers. The S&P 500 has lost 2% over the past four sessions, marking its deepest four-day decline since June.

Nine of the 11 sector indexes declined, with materials and information technology leading the loss. Trading volume was heavier than usual, with 15.1 billion shares traded compared to an average of 14.9 billion over the past 20 sessions. Traders now have a 70% chance of a Fed rate hike of at least 25 basis points next week, up from 64% before the report.

The S&P 500 is now down nearly 3% from its record high on August 13 and remains up 11% in 2026. Despite a strong earnings outlook, the benchmark trades at 19 times expected earnings, its cheapest level since April 2025. Macy's and American Eagle Outfitters reported declines, with Macy's raising its annual forecasts but not impressing investors, and American Eagle Outfitters maintaining a low stock price due to its annual comparable sales forecast.