Oil down, but stocks lower as bond yields rise

On September 29, US and European stocks faced a mainly downward trend despite a decline in oil prices, as bond yields climbed and investors awaited crucial inflation data. The US 30-year Treasury yield hit 5.62%, a level not observed in 24 years, while the 10-year yield remained at its peak since 2007 at 5.25%. Art Hogan from B. Riley Wealth Management stated that higher yields persistently hinder investors, a concern that has persisted for the past month.

Consequently, the Dow Jones fell 0.26%, the Nasdaq index dropped 0.09%, and the S&P 500 index declined 0.17%.

Investors are now eagerly anticipating the PCE, the Federal Reserve's preferred inflation gauge, which is released on Wednesday, and the official jobs numbers on Friday. The president of the Federal Reserve Bank of New York noted that despite the recent interest rate increase of 25 basis points, there is no immediate urgency to raise rates. However, further hikes might be necessary later in the year.

The US central bank's decision to raise interest rates earlier this month aimed to combat persistent high inflation. However, oil prices, which had surged on Monday, reversed course after US President Donald Trump expressed expectations for Middle East talks to progress and reported ongoing shipments from the region. Crude's current slide indicates optimism surrounding the easing of Middle East tensions and the resumption of Saudi pipeline flows, which are counterbalancing disruptions via the Strait of Hormuz, according to IG analyst Axel Rudolph.

The benchmark US crude contract WTI was trading near $89 per barrel, while its international counterpart, Brent crude, exceeded $102 per barrel. Briefing.com analyst Patrick O'Hare suggested that oil prices reacted favorably to a report that oil exports from the Middle East reached a post-war high. Main indices experienced losses on Tuesday, with sentiment further dampened by data indicating a sharp decline in US consumer confidence to a level unseen since 2014.

In Europe, London and Paris both concluded lower, while Frankfurt ended the day with a modest gain. On Tuesday, President Trump announced that tech executives at the White House had pledged a "morally binding" commitment to establish safeguards for artificial intelligence. Notable tech stocks included Nvidia, which fell 0.72%, Alphabet, which decreased 0.53%, Meta (Facebook, Instagram) increased by 3.24%, and Amazon rose 0.21%.