Key facts
- Dow futures fell to a three-month low on Thursday due to inflation and rising government debt concerns.
- Treasury 10-year note yields reached 5.32% and 30-year bond yields hit 5.66%, their highest since 2002.
- Micron Technology forecast quarterly revenue above market expectations, with customers increasing commitments to $32 billion.
- Lam Research and Applied Materials added 1.8% each, while Nvidia and Advanced Micro Devices were up about 1% each.
- Alphabet advanced 2.3% after announcing its Gemini 4 flagship AI model.
- The CBOE's VIX index hit a two-week high at 16.84 points.
Dow futures slipped to a more than three-month low on Thursday as concerns over inflation and rising government debt drove Treasury yields to multi-decade highs. However, blowout results from Micron Technology offered some support to chip stocks, while Alphabet advanced on news of its AI model.
Stock market movements have closely tracked bond yields recently, as traders assess the Federal Reserve's monetary policy path amid higher energy costs contributing to price pressures. Efforts by the Treasury department to curb the selloff through increased long-term bond buybacks have had limited impact, with European and Japanese markets also facing debt worries.
Yields on 10-year notes and 30-year bonds reached their highest levels since 2002, at 5.32% and 5.66% respectively, following the benchmark Treasuries' worst quarterly performance since 1994. Analysts suggest that optimism surrounding AI trade has prevented a sharper selloff in U.S. equities compared to European peers, a sentiment reinforced by Micron's results.
Micron forecast quarterly revenue above market expectations and reported that customers had increased commitments under its supply agreements to $32 billion. Despite this, the stock dipped about 1% in premarket trading, reflecting high investor expectations. Broader sector stocks like Lam Research and Applied Materials gained 1.8% each, with Nvidia and Advanced Micro Devices also rising about 1% each. Alphabet was up 2.3% following the announcement of its Gemini 4 AI model.
At 04:48 a.m. ET, Dow E-minis were down 0.52%, S&P 500 E-minis were down 0.02%, and Nasdaq 100 E-minis were up 0.29%. The CBOE's VIX index, a measure of market fear, hit a two-week high of 16.84 points.
Wall Street experienced a volatile September, with the S&P 500 and Dow logging monthly declines, though AI enthusiasm helped the Nasdaq post gains. Softer-than-expected inflation data on Wednesday tempered expectations of an interest-rate hike this month, with traders pricing in a 63% chance of a hold, according to CME Group's FedWatch Tool. However, with inflation still above the 2% target, a December rate hike remains a possibility. Commentary from policymakers such as Thomas Barkin, Christopher Waller, Philip Jefferson, Michelle Bowman, and Lorie Logan is anticipated to provide further insights into the Fed's policy direction. Later in the day, weekly jobless claims data and the Institute for Supply Management's manufacturing activity indicator are due.