Treasury yields spiked, then reversed, as Wall Street logged its worst day since July
US Treasury yields swung and Wall Street posted its worst session since July on Wednesday after September US consumer prices rose 3.7 percent year over year, above the 3.6 percent economists had expected.
The US Consumer Price Index rose 0.6 percent on the month after a 0.4 percent gain in August, matching forecasts.
US core CPI, which excludes food and energy, rose 0.3 percent against the 0.2 percent expected in a Reuters poll, and 2.6 percent over 12 months, up from 2.4 percent in August.
US gasoline prices surged 9.1 percent and accounted for more than half the monthly increase, per Reuters, with diesel and other motor fuels up 11.9 percent on the month and 60.9 percent year over year.
US shelter costs and overall US services prices each rose 0.4 percent. Prices for computers and peripherals jumped 1.3 percent, reflecting AI-related investment.
Traders raised the probability of a quarter-point increase at the US Federal Reserve’s October meeting to roughly 35 percent from 22.1 percent a day earlier, CNBC reported, citing CME Group’s FedWatch tool; Reuters put the same shift at roughly 37 percent from about 22 percent.
CNBC also reported more than a 90 percent likelihood of at least one further US rate hike before the end of 2026, including a 40 percent chance rates finish half a percentage point higher.
The Fed raised its overnight benchmark by 25 basis points in September to a range of 3.75 to 4.00 percent, its first increase in three years, and flagged further hikes, according to Reuters.
Most economists continue to expect a hold this month and an increase in December.
“The bond bulls have turned around and are running the other way as 10-year yields have shot higher after today’s shocking inflation report,” Christopher Rupkey, chief economist at Fwdbonds, told CNBC.
The US 10-year Treasury yield slid more than 2 basis points to 5.19 percent after climbing earlier in the session, CNBC reported, with the midday reversal coming as US equities sold off and some investors rotated back into bonds.
AP put the intraday high above 5.32 percent, from less than 5.17 percent just before the release.
The 30-year US Treasury yield fell more than 4 basis points to 5.517 percent, while the two-year gained more than 1 basis point to 4.808 percent after touching its highest level since September 29.
AP News reported that the S&P 500 fell 86.51 points, or 1.1 percent, to 7,718.94, its largest one-day drop since July 29.
The Nasdaq composite sank 511.51 points, or 1.9 percent, to 26,692.87, its worst session since July 23, 2026, and the Dow Jones Industrial Average dipped 48.62 points, or 0.1 percent, to 51,621.48.
The Russell 2000 index of the smallest US stocks fell 1.9 percent.
Nvidia fell 3.2 percent, Broadcom 3.1 percent and Advanced Micro Devices 5.7 percent, AP reported, while CoreWeave tumbled 15.5 percent and Oracle sank 8.8 percent.
A benchmark semiconductor index fell 4.3 percent, leaving it down roughly 12 percent over the past week, according to CNN, which put Marvell down 8.7 percent and Dell down 11.3 percent.
“There’s just so much good news priced into the chip sector right now that you’re going to find it’s susceptible to meandering without some fresh catalysts,” Steve Sosnick, chief strategist at Interactive Brokers, told CNN.
Brent crude added 0.4 percent to US$106.06.
Economists polled by Dow Jones expect the September US producer price index to rise 0.6 percent on the month and 5.5 percent on the year, CNBC reported, with September US retail sales and weekly jobless claims scheduled for the same release time.
