S&P 500 and Dow Jones hit one-month low as crude oil prices and bond yields surge

The US stock markets extended the fall on Thursday as elevated crude oil prices continued to sour investor sentiment. The S&P 500 and the Dow Jones fell to one-month lows on Thursday as Treasury yields surged to three-year high levels. The NASDAQ 100 also opened more than 1% lower, pulled by profit-taking in the tech stocks.

Crude oil prices rose to four-month high levels as the US military continued to strike oil tankers in the Strait of Hormuz. Brent crude oil prices surged 2.7% higher to $105 per barrel, and WTI crude oil prices surged to the $100 per barrel mark.

The US Treasury Secretary announced a $6 billion bond buyback programme to calm the bond market. Despite tripling its bond buyback programme, bond yields continued to surge to three-year high levels. The US 10Y yields now stand at 4.92%, the highest since October 2023, while the two-year yields surged to 4.52% on Thursday.

Rising bond yields pose a significant threat to the capex programme of AI companies and hyperscalers, which have raised billions to finance the AI infrastructure to meet the rising computing demand.

Among the mega hyperscalers, shares of Alphabet, Microsoft, Meta Platforms and Amazon fell as much as 1.4% on Thursday. Shares of Apple Inc surged over 2% after the company announced the new iPhone 18 Pro and Pro Max series on Wednesday.

Shares of Oracle fell over 2.7% on Thursday evening ahead of its earnings. The street expects revenue of $19.06 billion, up 28% YoY, and earnings per share of $1.74 per share.

Meanwhile, SpaceX's share price rose over 3% ahead of its payload launch for the US Space Force later today. The payload will be launched into space on a Falcon 9, which will be the 104th launch this year. It has launched Falcon 9 165 times till now, accounting for nearly half of the global space launches, underscoring its global dominance in the category.

Besides the stock-specific development, investors will closely watch the producer price index numbers, to be announced later today. Economists polled expect it to be at 5.3%, higher than 4.7% in July, underscoring the inflation impact on the economy.