US 10-Year Yield Hits 5.106% on Strong PMI Data
Strong September PMI data pushed the 10-year U.S. Treasury yield to its highest level since 2007, triggering a broad sell-off in tech stocks.
Key points
- The 10-year U.S. Treasury yield hit 5.106%, the highest since 2007, following a September PMI of 58.4.
- The S&P 500 fell 0.75% and the Nasdaq dropped 1.13% as investors priced in a 70% chance of an October rate hike.
- Expedia fell over 7% and Airbnb dropped 6% as AI agents began competing with traditional travel booking platforms.
The 10-year U.S. Treasury yield jumped to 5.106%. This marked the highest level since 2007. The move followed strong September economic data. Wall Street reacted with a sell-off in major tech stocks. Investors now expect a higher probability of future rate hikes. The dollar strengthened, pressuring gold and crypto assets.
The S&P 500 fell 0.75% to 7,706.03. The Nasdaq dropped 1.13% to 26,936.04. The Dow Jones declined 0.68% to 51,511.59. The Philadelphia Semiconductor Index also fell 1.19%. This ended a streak of consecutive gains for chip stocks. The VIX index rose to 15.18, signaling higher market volatility.
Yields spike on strong economic data
The S&P Global Composite PMI rose to 58.4. This was the highest reading since July 2021. Business input costs reached their highest level in four years. Strong new orders indicated robust economic activity. This data reduced the likelihood of immediate rate cuts. It increased the probability of further tightening.
Rate futures priced in a 70% chance of an October hike. This was up from around 53% earlier in the session. Federal Reserve Governor Michael Barr noted rising inflation risks. He stated that further policy adjustments may be necessary. The 2-year yield rose 11 basis points to 4.891%. This was the highest since May 2024.
Oil rises and gold falls
WTI crude oil rose 2.3% to $92.60 per barrel. Brent crude increased 4.28% to $103.50. Tensions between the U.S. and Iran supported these gains. Spot gold fell 1.64% to around $4,283. The stronger dollar pressured precious metals. Bitcoin briefly dropped below $84,000 before stabilizing.
Ethereum fell below $2,700 as interest rates retreated. Crypto assets followed the broader risk-off trend. The Philadelphia Semiconductor Index closed at 12,538.33. This decline reflected the pullback in tech-heavy sectors. Investors rotated away from growth stocks due to yield increases. The Nasdaq Golden China Index fell 1.34%.
Travel stocks face AI competition
Expedia fell over 7% as AI agents gained traction. Airbnb dropped about 6% in the same session. These platforms face competition from direct AI booking tools. Meta rose about 1% on continued AI momentum. Alphabet fell 3.8% and Amazon dropped 2.2%. NVIDIA declined approximately 1.5% as chip stocks pulled back.
The market focus shifted to companies losing traffic to AI. Agents can search hotels and compare prices directly. This threatens the core search functionality of traditional travel sites. Amazon blocked Muse from accessing its shopping platform earlier. This action highlights the tension between platforms and AI agents. The source, KuCoin, reported these market shifts.
