US equities declined for a fourth straight session on Thursday, marking the longest losing streak since June, as surging crude prices and fresh signs of sticky inflation pushed Treasury yields higher and reinforced investor bets on another Federal Reserve rate hike. The S&P 500 slipped 0.6% to its lowest close since July, while the Nasdaq 100 dropped 1.1%.
With geopolitical tensions in the Middle East escalating, WTI crude jumped roughly 7% to around $103 per barrel, reaching its highest level since May. Treasury yields rose across the maturity curve, with the 10-year yield breaking above 4.9% to multi-year highs. Yields climbed further during Thursday's afternoon session after the Treasury's first expanded buyback operation under Secretary Scott Bessent purchased fewer 10- to 20-year notes than investors had anticipated.
The VIX, Wall Street's fear gauge, added one point to 18, its highest reading in more than a month. At the closing bell, the S&P 500 was down 0.6% at 7,591.7 points, the Dow Jones Industrial Average fell 0.6% to 52,064.1, the Nasdaq Composite slipped 0.7% to 26,081.72, the Nasdaq 100 declined 1.1% to 29,103.51, and the Russell 2000 dropped 1% to 2,890.947 points.
Data released on Thursday showed the US Producer Price Index rose 0.4% in August from July, the largest monthly gain since May. This followed comments from European Central Bank President Christine Lagarde, who indicated that eurozone inflation would remain well above target levels through 2027. Joe Brusuelas, chief economist at RSM US LLP, noted that the hot PPI print coupled with Lagarde's hawkish tone reflects a reality that global central banks may be on the verge of initiating a rate-hiking cycle, which is unfavorable for risk assets in the current or near-term environment.
Investors now turn their attention to Friday's Consumer Price Index report, which will help shape expectations for the Fed's decision next week. On Thursday, traders raised the implied probability of a rate hike at next week's meeting to approximately 70%, while fully pricing in an increase by the end of October. Stephanie Roth, chief economist at Wolfe Research, said that yields and oil prices may need to retreat before equities can perform well, a scenario that could materialize if Friday's inflation data comes in notably soft.
The prospect of higher rates creates headwinds for stocks, particularly high-valuation growth names. Andrew Graham, partner at Jackson Square Capital, explained that rising bond yields compress valuation multiples, an effect that tends to be most pronounced for richly valued equities. He attributed Thursday's yield surge to a combination of higher crude prices, the PPI report, and fiscal policy signals stemming from President Donald Trump's pledge to distribute $5,000 checks to voters if Republicans prevail in the midterm elections.
In individual stock moves, Apple climbed 3.6% as analysts generally responded positively to the company's new foldable iPhone. Adobe fell 2.4% ahead of its post-market earnings report. Adam Crisafulli, founder of Vital Knowledge, wrote that while the entire software sector has rebounded sharply from lows as investor concerns about AI-driven disruption and replacement have eased, many believe stocks like Adobe still face significant long-term risks. Department store operator Macy's saw its shares pull back as investors weighed better-than-expected second-quarter profits and same-store sales against relatively softer third-quarter guidance.
In exchange-related news, Nasdaq Inc. is reportedly investing $100 million at a $21 billion valuation into Payward, parent company of cryptocurrency exchange Kraken, to build infrastructure supporting tokenized stock trading. Oracle was set to test investors' appetite for AI spending with its post-market results, reporting first-quarter cloud infrastructure (IaaS) revenue of $7.39 billion versus the $7.19 billion analyst estimate.
Among key sectors, copper mining stocks declined, with Freeport-McMoRan falling 6.6% and the Global X Copper Miners ETF dropping 7.0%. Financial data providers FactSet Research and S&P Global weakened after OpenAI announced ChatGPT for Financial Services, a tool tailored for investment bankers and equity researchers. In semiconductor news, Piper Sandler initiated coverage on the sector with buy ratings on Nvidia, Broadcom, AMD, and other names.