US markets extend losses; Dow Jones and NASDAQ plunges 200 pts and S&P 500 drops 0.5%

The US benchmark indices opened in deep red as soaring Treasury yields hovered near record peaks, souring investor sentiment. The NASDAQ 100 index opened over 260 points lower, followed by the S&P 500 at -0.4%, and the Dow Jones tanked over 200 points at the open.

The US 30Y yields hit 2007 high levels of 5.445% on Thursday, hinting at a massive selloff in bond prices. Similarly, the US 10Y yield also surged, hitting 5.15%, up more than 500 bps in a month. The sharp rise in yields has heightened the worries of investors and the government about elevated borrowing costs.

The impact of elevated yields was largely seen on the shares of AI hyperscalers and chip stocks. Consequently, shares of chip makers like SanDisk Corporation, Micron Technology, Intel Corporation, and Advanced Micro Devices fell as much as 2.3% at the open on Thursday.

Oracle shares also opened over 5% lower on Thursday after the company sent a force majeure notice to the developer of a data centre in Mexico to save itself from the potential payments from the facility if delayed, Bloomberg reported.

Jobless claims data

The labor market continued to show resilience as the initial jobless claims for the second week of September fell by 1000 to 1,97,000, much below the market expectations of 201,000. The stronger labor market data, coupled with sticky inflation, provides good headroom for the US Federal Reserve to adopt a hawkish outlook and keep interest rates high.

Crude oil prices recouped earlier losses amid dimmed expectations of a breakthrough between the US, Iran, and GCC countries. Brent crude oil prices hovered near $100 per barrel, while WTI crude oil prices jumped over 1.4% to $94 per barrel, after hitting an intraday low of $91 per barrel on Thursday.