10-Year Yield Hits 4.969% as S&P 500 Falls
Bond yields pushed to multi-year highs while oil breached $100, driving weekly stock losses despite Friday's gain.
The 10-year Treasury yield reached 4.969% on Thursday. This is the highest level since October 2023. The S&P 500 lost 0.8% for the week. Nine of eleven sectors finished in the red. Only energy and communication services posted gains. The index remains down 1.8% from its recent peak.
Investors faced a dual pressure from rising bond yields and oil prices. U.S. crude oil jumped past $100 per barrel on Thursday. This is the first time since May that prices hit this level. The market reacted to these macroeconomic shifts with broad selling across most sectors.
Treasury Action Targets Long-Dated Debt
Treasury Secretary Scott Bessent announced a $6 billion buyback program. The move targets longer-dated government bonds. The department aims to curb rising yields in this segment. This intervention follows a period of sustained yield increases since late August.
Inflation Data Fuels Rate Hike Odds
August headline inflation rose 3.4% year-over-year. This figure matched market expectations. Core inflation increased 0.3% month-over-month. This core reading exceeded economist forecasts. The probability of a Federal Reserve rate hike next week surged past 85%. This is up from 59% a week earlier, according to CME FedWatch data.
Tom Lee of Fundstrat expects the Fed to hold rates steady. He cites historical comparisons of gasoline prices to household budgets. Lee argues current fuel costs are lower than in previous crises. He predicts a sharp market rally following the inflation report. The S&P 500 added 0.9% on Friday, supporting this view.
Market Breadth Shows Sector Divergence
Mark Newton notes a decline in consumer discretionary and healthcare stocks. Financials also saw weakness during the week. Technology stocks recovered some ground. Newton believes this divergence weighs on near-term market breadth. He expects relief in bond and oil markets within five days. This shift may coincide with a broader market turn higher.
