U.S. markets were keyed into inflationary concerns on Wednesday as the 10-year Treasury yield soared to close at 5.11%, notching its highest level since July 2007.
- The surge followed rising inflation concerns after S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose from 56.0 in August to 58.4 this month, the highest level since July 2021.
- Chinese President Xi Jinping arrived in the U.S. on Wednesday for a high-stakes meeting with Trump.
- Oil prices also rallied on Wednesday amid inflation concerns.
U.S. stock futures edged lower in the overnight session late Wednesday as long-dated bond yields soared to 19-year highs amid inflation concerns, while investors closely watched for trade breakthroughs as U.S. President Donald Trump welcomed Chinese President Xi Jinping for a three-day summit in Washington.
Dow futures declined 0.13%, while the S&P 500 fell 0.10%. The Nasdaq-100 edged 0.08% lower at 10:35 PM EDT.
On Wednesday, all three benchmark indexes closed lower. The Nasdaq Composite led the declines, shedding more than 300 points to close 1.13% lower. Meanwhile, the Dow Jones Industrial Average declined 0.68% at close, and the S&P 500 index fell 0.75%.
| Index | Move | Close |
| Dow Jones Industrial Average | -0.68% | 51,511.59 |
| S&P 500 | -0.75% | 7,706.03 |
| Nasdaq Composite | -1.13% | 26,936.04 |
Key US Market Drivers
U.S. markets were driven by inflation concerns on Wednesday as the 10-year Treasury yield soared to close at 5.11%, its highest level since July 2007.
The surge followed rising inflation concerns after S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose from 56.0 in August to 58.4 this month, the highest level since July 2021.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the September surge in business activity was the strongest since early 2015, but warned that it coincided with some of the most severe supply-chain constraints recorded in the survey’s nearly 20-year history outside the pandemic.
He added that input costs rose at their fastest pace in four years, driven by higher fuel and transportation expenses linked to rising oil prices, likely putting further upward pressure on selling prices and inflation in the months ahead.
“Overall, it was a much stronger-than-expected read on U.S. business activity that implies ample latitude for both policy rates and Treasury yields to push higher in the near-term,” Vail Hartman, a U.S. rates strategist at BMO, told CNBC. “If anything, the data reinforces the risk of a renewed acceleration in demand-driven inflation even if supply-side inflation subsides.”
The U.S. 10-year Treasury yield soared to 5.127% at the time of writing, while the U.S. 30-year Treasury yield traded at 5.418%.
BlueBay Asset Management's head of market strategy, Mike Bell, told Reuters that the latest move above 5% may have started triggering concerns about a rise to 6%.
"People think of it as if there's a magic number for Treasury yields at which it becomes a problem, (but) it's a relative number, not an absolute number," Bell told Reuters, noting that the 5% threshold has always been a psychological marker rather than an automatic tripwire.
Bell noted that the relationship is now approaching an inflection point, potentially setting the stage for an equity selloff.
Oil prices also climbed, adding to inflation worries. At the time of writing, Brent crude futures expiring in November were trading at $102.22, while WTI crude futures expiring in November traded at $91.52 per barrel.
Meanwhile, on Wednesday, Chinese President Xi arrived in the U.S. for a high-stakes meeting with Trump. As the U.S. and China compete to advance artificial intelligence, AI is expected to feature prominently at the summit. Trump and Jinping will hold their core bilateral meeting, followed by a state dinner at the White House.
The guest list is expected to include some of the biggest names in technology and business, including Microsoft’s Satya Nadella, Apple Executive Chairman Tim Cook, OpenAI CEO Sam Altman, Nvidia CEO Jensen Huang, Amazon founder Jeff Bezos, Tesla and SpaceX CEO Elon Musk, Alphabet CEO Sundar Pichai, Dell Technologies founder Michael Dell and Citigroup CEO Jane Fraser.
Meanwhile, U.S. Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng ahead of the summit, telling Fox News on Wednesday that Washington and Beijing would extend their trade truce by two months, to early January.
Trending Stocks To Watch
Meta Platforms Inc. (META): Shares of the tech giant were on the retail radar after the company revealed a slate of new products at its annual two-day Connect event, including new VR glasses and a Tamagotchi-like AI device.
Alphabet Inc. (GOOG): Shares of Google’s parent company garnered attention after the head of its DeepMind division said Wednesday that it is nearing the release of its newest flagship model, Gemini 4.
McDonald's Corp. (MCD): The burger chain on Wednesday detailed its greater than NEXT strategy and announced new financial targets tied to the enhanced growth and productivity that it will enable. The company said that it is targeting 1.5 percentage points of market share gains in both chicken and beverage categories by 2030 while maintaining its leadership position in beef.
Unity Software Inc. (U): The video game software company gained more than 5% in the overnight session late Wednesday as markets link its rally to Meta Connect, where Unity’s role as a supported engine for Meta’s VR platforms has raised expectations for a possible Unity-related announcement.
Other Market Trends
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), the Invesco QQQ Trust (QQQ) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) traded lower at the time of writing.
The iShares 20+ Year Treasury Bond ETF (TLT) was down 0.15% amid ‘neutral’ sentiment.
Asian markets opened mixed on Thursday. South Korea's KOSPI and Japan’s Nikkei 225 were trading in the green territory at the time of writing, while China’s SSE Composite and Australian stocks were in the red at the open.
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