Wall Street's main indexes closed lower for a third straight day on Thursday after August producer price data and a sharp jump in oil prices deepened fears that the Federal Reserve will raise interest rates next week, while rising U.S. Treasury yields made stocks less attractive to investors.
The Dow Jones Industrial Average shed 313.64 points, or 0.60%, to end at 52,067.02. The broader S&P 500 fell 44.16 points, or 0.58%, to close at 7,592.20, and the technology-heavy Nasdaq dropped 167.15 points, or 0.64%, to 26,086.19.
Chip Makers Drag Down the Market
Shares of major chipmakers slid, with Nvidia and Micron Technology weighing heavily on the S&P 500. Apple bucked the trend and rose, a day after unveiling a new iPhone priced at $1,999.
Of the 30 stocks that make up the Dow, only seven posted gains while 23 fell. Apple led the gainers with a 3.56% jump to $326.57, followed by Walt Disney, up 1.60% to $105.85, and Alphabet, up 0.59% to $332.60. On the losing side, International Business Machines Corp. fell 2.44%, Nvidia dropped 2.26% and Amgen slid 2.25%.
Oil Prices Jump on Supply Fears
Brent crude climbed 6% to $107 a barrel as supply routes through both the Strait of Hormuz and the Red Sea remained disrupted by the war between the United States and Israel against Iran. The rally in oil deepened inflation worries and fed expectations that the Fed will raise rates at its policy meeting on Wednesday.
Yields on 10-year U.S. Treasury notes rose to their highest level in nearly three years, while 30-year bond yields reached their highest point in more than 19 years. Two-year yields climbed to their highest level in more than two years.
Producer Prices and the Path for the Fed
Thursday's data showed the U.S. producer price index (PPI) rose in August in line with expectations on a monthly basis, amid a rebound in energy costs. Investors are now watching for August consumer price data, due out on Friday.
Traders now see a 70% probability that the Federal Reserve will raise interest rates by at least 25 basis points next week, up from about 64% before Thursday's data was released, according to the CME Group's FedWatch tool. The tool tracks futures pricing to estimate the market's expectations for Fed policy moves.
S&P 500 Off Its Record High
Following the recent losses, the S&P 500 is now almost 3% below the record closing high it set on August 13, though it remains up 11% for 2026.
The index's recent pullback, combined with strong earnings prospects, has left it trading at 19 times expected earnings, its lowest valuation since April 2025. That was when President Donald Trump's "Liberation Day" tariff announcements roiled global markets.
American Eagle Outfitters Slides
American Eagle Outfitters fell to its lowest level since October after the clothing retailer reaffirmed its annual forecast for comparable sales, amid volatile consumer spending on non-essential goods.
