Wall Street opens lower as oil, bond yields move up ahead of US-China summit

Wall Street experienced a lower opening on Wednesday (Sep 23) as oil prices rose and bond yields climbed ahead of a crucial US-China summit. The Dow, S&P, and Nasdaq indices all fell at the opening bell. Brent crude prices surged over 1%, having declined for five consecutive sessions, though they remained close to a two-week low.

US government bond yields ticked higher, fueling concerns over sustained elevated borrowing costs. "The market is in a limbo right now... because bond yields and oil prices are up," commented Sam Stovall, chief investment strategist at CFRA Research. Chip-related companies, including AMD, Nvidia, and Intel, faced pressure, with the Philadelphia chips index slipping 1.5%.

Meta Platforms gained 1.5%, building on a more than 10% rise this week following a positive reception for its AI assistant, Muse. Major lenders like JPMorgan Chase and Goldman Sachs steadied after recording steep losses the previous day. The S&P 500 Financials sector was flat, having posted its largest daily drop since March on Tuesday.

The materials sector declined 0.9%, driven by miners like Newmont as metal prices fell against a stronger US dollar. The Dow Jones Industrial Average opened 92.3 points or 0.18% lower at 51,771.41. The S&P 500 fell 2.7 points or 0.03% to 7,761.94, while the Nasdaq Composite dropped 30.8 points or 0.11% to 27,213.519. Earlier in the week, the tech-heavy Nasdaq had reached a record high, buoyed by optimism around AI.

However, markets retreated on Wednesday, leaving traders to wait for updates from US and Iranian officials following their negotiations at the UN General Assembly. Chinese President Xi Jinping is set to visit Washington later in the day for a state visit, focusing on the trade truce, AI regulation, and US arms sales to Taiwan. Fed Governor Michael Barr is also expected to speak later in the day, as policymakers weigh the impact of AI spending and rising energy costs from the US-Iran war on interest rates.

Increasing interest in AI spending and higher energy costs prompted the Fed to suggest that interest rates may remain restrictive for a longer period, with a 50% chance of a 25-basis-point hike in October, according to the CME Group's FedWatch tool. On the earnings front, Cracker Barrel added 3.8% after beating fourth-quarter sales estimates, while Paychex declined 5.4% after missing Q1 revenue projections.