Stocks Pressured as Bond Yields Climb

The S&P 500 Index ($SPX) (SPY) today is down -0.08%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.15%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.05%.  September E-mini S&P futures (ESU25) are down -0.07%, and September E-mini Nasdaq futures (NQU25) are up +0.05%. 

Stock indexes are mixed today, with the Nasdaq 100 posting a new all-time high.  The broader market is under pressure as higher bond yields prompt some long liquidation pressures in stocks.  The 10-year T-note yield is up +5 bp to 4.05%.  Bond yields are climbing as today's +1% rally in WTI crude oil has pushed up inflation expectations.  Crude prices jumped after Bloomberg reported that the US is proposing that the Group of Seven allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end its war in Ukraine.

Most major US benchmark indexes, including the S&P 500, the Dow Jones Industrials, and the Nasdaq 100, posted record highs on Thursday, driven by expectations of Fed interest rate cuts.  Stocks rallied to new all-time highs this week as weak labor market news and relatively contained inflation reports bolstered expectations for at least a 25 bp rate cut by the Fed at next week's FOMC meeting and a total of 75 bp of rate cuts by year's end. 

In a negative factor for the US economy, today’s University of Michigan's Sep US consumer sentiment index fell -2.8 points to 55.4, which was weaker than expectations for a -0.2 decline to 58.0.

The markets are pricing in a 100% chance of a -25 bp rate cut and a 9% chance of a -50 bp rate cut at the upcoming FOMC meeting on Sep 16-17.  After the fully expected -25 bp rate cut at the Sep 16-17 meeting, the markets are discounting a 95% chance of a second -25 bp rate cut at the Oct 28-29 meeting.  The markets are pricing in an overall -71 bp rate cut in the federal funds rate by year-end to 3.62% from the current 4.33% rate.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -0.09%.  China's Shanghai Composite fell from a 10-year high and closed down -0.12%.  Japan's Nikkei Stock 225 rallied to a new all-time high and closed up +0.89%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down -10 ticks.  The 10-year T-note yield is up by +5.3 bp to 4.055%.  T-notes are sliding today on profit taking and long liquidation following this week's rally to 5-month highs.  Also, today's +1% jump in the price of WTI crude oil has raised inflation expectations and is negative for T-notes.

This week's Fed-friendly US economic news on labor markets and inflation cemented expectations for at least a 25 bp rate cut at next week's FOMC meeting.  Also, today’s US consumer sentiment report was weaker than expected.  The markets are now pricing in an overall -71 bp rate cut in the federal funds rate by year-end to 3.62% from the current 4.33% rate.

Concerns about Fed independence are negatively impacting T-note prices due to President Trump's attempt to fire Fed Governor Cook and Stephen Miran's intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.

European government bond yields are moving higher today.  The 10-year German bund yield is up +4.9 bp to 2.706%. The 10-year UK gilt yield is up +4.3 bp to 4.649%.

ECB Governing Council member and Bundesbank President Nagel said, "The present interest rates are appropriate if inflation develops as projected.  So, unless there's any other significant development, there's no need to take action soon."

ECB Governing Council member Villeroy de Galhau said, "Nothing is pre-determined in advance, but it is absolutely possible there is another rate cut at the coming ECB meetings, as several of us, including myself, underlined the downward risks to inflation in the near future."

UK July manufacturing production unexpectedly fell -1.3% m/m versus expectations of +0.1% m/m and the biggest decline in a year.

Swaps are discounting a 4% chance for a -25 bp rate cut by the ECB at the October 30 policy meeting.

US Stock Movers

Micron Technology (MU) rose more than +7% to lead semiconductor stocks higher after Citigroup raised its price target on the stock to $175 from $150.  Also, Lam Research (LRCX) closed up more than +7% and Applied Materials (AMAT) closed up more than +4%.  In addition, KLA Corp (KLAC) and ON Semiconductor (ON) closed up more than +2%, and ASML Holding NV (ASML), ARM Holdings Plc (ARM), NXP Semiconductor (NXPI), GlobalFoundries (GFS), and Qualcomm (QCOM) closed up more than +1%. 

Today's jump in T-note yields is weighing on home builders and home builder suppliers.  Lennar (LEN), DR Horton (DHI), Builders FirstSource (BLDR), PulteGroup (PHM), and Toll Brothers (TOL) are down more than -1%

RH (RH) is down more than -1% after reporting Q2 revenue of $899.2 million, weaker than the consensus of $905.3 million, and cutting its full-year revenue forecast to +9% to +11% from a previous estimate of +10% to +13%.

Stellantis NV (STLA) is down more than -2% after UBS said the risk-reward profile for the stock looks "unattractive" in the near-term. 

Oracle (ORCL) is down more than -2%, adding to Thursday's -6% decline, on reports that the Ellison family backs the offer by Paramount Skydance to purchase Warner Bros Discovery. Larry Ellison is chairman and co-founder of Oracle. 

MGM Resorts International (MGM) is down more than -2% on signs of insider selling after an SEC filing showed Director Meister sold $8.57 million of shares on Thursday.

Molson Coors Beverage (TAP) is down more than -1% after Barclays downgraded the stock to underweight from equal weight. 

Applied Materials (AMAT) is down more than -1% after Mizuho Securities downgraded the stock to neutral from outperform and cut its price target to $175 from $200. 

Warner Bros Discovery (WBD) is up more than +10%, adding to Thursday's +28% surge and leading gainers in the S&P 500 and Nasdaq 100, on reports that Paramount Skydance is preparing a bid to acquire the company.

Micron Technology (MU) rose more than +3%, adding to this week's +13% rally on speculation that the company's growth potential will accelerate due to strong demand for its AI chips.

Super Micro Computer (SMCI) is up more than +4% after announcing that it is delivering high-volume Nvidia HGX B300 systems and Nvidia GB300 NVL72 in volume to customers worldwide. 

Tesla (TSLA) is up more than +2% after Nevada's Department of Motor Vehicles approved the testing of Tesla's autonomous vehicles in the state.

Alaska Air Group (ALK) is up more than +2% after JPMorgan Chase raised its price target on the stock to $96 from $73. 

General Motors (GM) is up more than +1% after Barclays upgraded the stock to overweight from equal weight with a price target of $73. 

Earnings Reports(9/12/2025)

Compass Diversified Holdings (CODI), EVI Industries Inc (EVI), Immersion Corp (IMMR), Kestra Medical Technologies Ltd (KMTS), Mercurity Fintech Holding Inc (MFH), Triller Group Inc (ILLR), Value Line Inc (VALU).