U.S. equity markets declined at midday on Thursday, with the Invesco QQQ Trust, Series 1 (NASDAQ: QQQ) falling 0.99% to $709.23. The decline was driven by a spike in crude oil prices and a sharp rise in long-term Treasury yields, which increased the probability of a Federal Reserve interest rate hike next week.
Crude oil prices surged, with West Texas Intermediate climbing 5.6% to $101.43 per barrel and Brent crude increasing 5.5% to $106.78. This volatility was fueled by comments from former President Donald Trump regarding oil prices and futures markets pricing in a conflict that could extend beyond the November election.
Simultaneously, Treasury yields hit multi-decade highs. The 10-year yield rose 8 basis points to 4.93%, the highest level since 2023, while the 30-year yield climbed 5 basis points to 5.35%, a level last seen in May 2007. The 2-year yield added 9 basis points to 4.53%.
The yield increase was triggered by the release of August Producer Price Index (PPI) data, which showed the annual rate accelerating to 5.4% from a revised 4.8%. This data hardened market expectations for a rate hike, with CME FedWatch tools indicating the odds of a hike at the next meeting climbed to roughly 70%.
Major equity indices also fell. The S&P 500 dropped 0.4% to 7,605.06, and the Dow Jones Industrial Average declined 266 points, or 0.5%, to 52,114.23. The Nasdaq 100 slipped 0.7% to 29,222.19.
Among sector ETFs, the Technology Select Sector SPDR Fund (NYSE: XLK) fell 1.0%, while the Materials Select Sector SPDR Fund (NYSE: XLB) was the worst performer, down 1.3%. The Energy Select Sector SPDR Fund (NYSE: XLE) eased 0.3% despite the oil rally, holding a 47.6% year-to-date gain.
On the individual stock level, Apple Inc. (NASDAQ: AAPL) was a standout gainer, rising 2.6% following the launch of a foldable iPhone Duo. Conversely, The Cooper Companies Inc. (NASDAQ: COO) plunged 14.7% after missing revenue estimates and cutting full-year guidance.
