The S&P 500 Index ($SPX) (SPY) is down by -0.36% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.55%. December E-mini S&P futures (ESZ26) are down -0.36%, and December E-mini Nasdaq futures (NQZ26) are down -0.60%.

Stock indexes are under pressure today, with the Dow Jones Industrials falling to a 1-week low as higher crude oil prices fuel inflation concerns and push up bond yields worldwide. WTI crude is up more than +2% today after an Iranian official warned Iran may expand the war to the Indian Ocean if the US or Israel attacks again.

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The jump in crude oil prices has sparked a sell-off in global bond markets, with the 10-year T-note yield climbing to a 19-year high of 5.15%, the German 10-year Bund yield rising to a 17-year high of 3.59%, and Japan’s 10-year JGB bond yield soaring to a 30-year high of 3.09%. The surge in bond yields is weighing on interest rate-sensitive technology stocks today, with chipmakers and AI-infrastructure stocks retreating.

Today’s US economic news showed weekly initial unemployment claims unexpectedly fell -1,000 to a 2-month low of 197,000, showing a stronger labor market than expectations of an increase to 200,000.

Hawkish comments today from New York Fed President John Williams signal he favors additional Fed rate hikes and are bearish for stocks and bonds. He said the Fed still has a lot of work to do given high energy prices and demand driven by investment in artificial intelligence.

On the positive side for stocks, Treasury Secretary Bessent said late Wednesday that the US and China agreed to extend their trade truce an additional two months until January 10.

Nov WTI crude oil prices (CLX26) are up more than +2% after Iran threatened to expand the war in the Middle East after a senior member of Iran's Revolutionary Guard Corps warned that Iran may expand the war to the Indian Ocean if the US or Israel attacks again. Optimism that the US and Iran could reach a settlement that would help normalize energy flows through the Strait of Hormuz has receded over the past two days amid aggressive rhetoric from President Trump and defiance from Iran.

Markets are discounting a 64% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.

Overseas stock markets are mixed today. The Euro Stoxx 50 is down -0.21%. China's Shanghai Composite closed down -1.22%. Japan's Nikkei-225 Stock Average rallied to a 2-week high and closed up +0.76%.

December 10-year T-notes (ZNZ6) are up by +4 ticks today. The 10-year T-note yield is down -1.7 bp to 5.098%. Dec T-notes erased early losses today and moved higher, and the 10-year T-note yield fell from a 19-year high of 5.148% and turned lower. Comments from Richmond Fed President Barkin sparked short covering in T-notes today, when he said new job growth in the US labor market remains slow.

T-notes initially fell today on the +2% increase in WTI crude oil prices, which boosts inflation expectations. Also, today’s unexpected decline in weekly jobless claims to a 2-month low signals labor market strength that is hawkish for Fed policy. In addition, hawkish comments from New York Fed President John Williams weighed on T-notes today when he signaled he favors additional Fed rate hikes, saying the Fed still has a lot of work to do to contain inflation. Finally, supply pressures are bearish for T-notes as the Treasury will auction $44 billion of 7-year T-notes later today.

European government bond yields are mixed today. The 10-year German bund yield rose to a 17-year high of 3.589% and is up +1.2 bp to 3.567%. The 10-year UK gilt yield fell from a 1-week high of 5.388% and is down -1.7 bp to 5.330%.

Eurozone Aug new car registrations rose +4.5% y/y to 708,000 units.

The German Sep IFO business climate survey rose +1.1 to a 3.25-year high of 89.9, stronger than expectations of 89.0.

ECB Executive Board member Isabel Schnabel said the energy shock caused by the Iran war is proving to be longer-lasting than initially thought and is spreading beyond just oil.

ECB Governing Council member Dimitar Radev said policymakers must give recent interest rate hikes time to work before assessing whether additional hikes are needed.

Markets are discounting a 52% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.

Chipmakers and AI stocks are under pressure today, weighing on the overall market. The iShares Semiconductor ETF (SOXX) is down more than -1%. Western Digital is down more than -3% to lead losers in the Nasdaq 100 and SanDisk (SNDK) is down more than -3%. Also, ARM Holdings Plc (ARM), Microchip Technology (MCHP), KLA Corp (KLAC), NXP Semiconductors NV (NXPI), Micron Technology (MU), and Lam Research (LRCX) are down more than -2%. In addition, Applied Materials (AMAT), ASML Holding NV (ASML), Nvidia (NVDA), Broadcom (AVGO), Analog Devices (ADI), and Texas Instruments (TXN) are down more than -1%.

Software stocks are under pressure today, led by a -7% fall in Oracle (ORCL) after it sent a notice citing force majeure to the project’s developer of a data center, a unit of Blue Owl Capital, in New Mexico in an attempt to put off payments should the data center dubbed Project Jupiter get derailed and fail to come online in 2028 as planned. Also, IBM (IBM) is down more than -2% to lead losers in the Dow Jones Industrials, and ServiceNow (NOW) are down more than -2%. In addition, Microsoft (MSFT), Palantir Technologies (PLTR), Atlassian Corp (TEAM), and Datadog (DDOG) are down more than -1%.

Energy stocks and service providers are climbing today, with WTI crude oil up more than +2%. Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO) are up more than +2%. Also, APA Corp (APA), ConocoPhillips (COP), Devon Energy (DVN), Occidental Petroleum (OXY), and ExxonMobil Holdings (XOM) are up more than +1%.

MGM Resorts International (MGM) is down more than -10% to lead losers in te S&P 500 after People Inc. dropped its plans to acquire the remaining shares of the company.

Dropbox (DBX) is down more than -3% after Citigroup downgraded the stock to sell from neutral with a price target of $29.

Alkami Technology (ALKT) is down more than -3% after JPMorgan Chase double-downgraded the stock to underweight from overweight with a price target of $14.

Darden Restaurants (DRI) is down more than -2% after reporting Q1 sales of $3.20 billion, below the consensus of $3.21 billion.

Everpure (P) is up more than +10% to lead gainers in the S&P 500 after forecasting 2028 revenue of $7.0 billion to $7.3 billion, well above the consensus of $6.19 billion.

Dollar General (DG) is up more than +2% after HSBC upgraded the stock to buy from hold with a price target of $160.

Costco Wholesale Corp (COST), Darden Restaurants Inc (DRI), NexPoint Diversified Real Estate Trust (NXDT), Scholastic Corp (SCHL), TD SYNNEX Corp (SNX).

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. For more information please view the Barchart Disclosure Policy here.