Long-dated U.S. Treasury yields pushed higher again and set the tone for global markets. U.S. stocks closed lower across the board, with the Dow Jones Industrial Average down 0.66%, the S&P 500 off 0.22%, and the Nasdaq Composite also lower by 0.22%, ending a five-session winning streak. The Russell 2000 fell 1.31%, showing continued pressure on smaller, rate-sensitive companies.
The bond market was at the center of the move. The 10-year Treasury yield briefly touched 5.36%, its highest level since 2002, before ending near 5.28%. The 30-year yield climbed as high as 5.732%, also marking a high not seen since May 2002. Pressure was not limited to the U.S. France’s fiscal concerns resurfaced, widening the spread between French and German 10-year bonds to about 140 basis points, while the U.K. 30-year gilt yield briefly rose to 6.04%, a 28-year high. The selloff in sovereign debt on both sides of the Atlantic lifted discount rates and weighed on risk assets.
The 10-year auction helped briefly, but the 30-year sale is the next test
A $39 billion auction of 10-year Treasuries was the market’s only clear point of relief during the session. The high yield came in at 5.300%, the highest since November 2000. Demand, however, was strong: the bid-to-cover ratio reached 2.77, the highest since 2016, foreign demand was close to a record, and the share taken by non-dealers hit an all-time high. After the auction, yields pulled back for a short period and equity losses narrowed.
Views on where yields go next remain split. William Marshall, Goldman Sachs’ head of rates strategy, still expects yields to fall back to 4.75% by year-end. Barclays, by contrast, raised its forecast for the 10-year Treasury yield in the third quarter of 2027 to 5.25% and said it sees almost no catalyst for a move below 5% while the economy remains resilient.
The next focal point is the $22 billion 30-year Treasury auction scheduled for 1:00 a.m. on Oct. 9. The security on offer is a 30-year bond maturing on Aug. 15, 2056, with a 5.125% coupon. The Treasury will then buy back as much as $6 billion of 20- to 30-year bonds. Strong demand could give long-end yields a pause. Weak demand could send them higher again and renew pressure on richly valued technology shares.
Fed minutes stayed hawkish as inflation and oil remain in focus
Minutes from the Federal Reserve’s September meeting struck a hawkish tone. All 19 officials supported a 25-basis-point rate increase to 3.75%-4%, and most participants said another increase before year-end could be appropriate. The minutes said inflation remains elevated, while geopolitical tensions have pushed up oil prices and a surge in AI investment has added to the pressure.
A New York Fed survey showed one-year inflation expectations rising to 3.9%, the highest level in more than three years, while household financial expectations also deteriorated. The market is now pricing in about a 22% chance of a rate increase in October, with a relatively high probability still assigned to another move before the end of the year.
Oil stayed elevated, the dollar strengthened, and metals fell
Geopolitical risk remained part of the market backdrop. U.S. media reported that the Pentagon has instructed Central Command to prepare for the possible resumption of large-scale operations against Iran, with Donald Trump weighing the timing. The report said any action could come before the Nov. 3 midterm elections or even before Israel’s election. Potential targets include energy assets, infrastructure, and nuclear facilities.
Brent crude held above $100 a barrel, while WTI traded in an $88-$90 range. International Monetary Fund Managing Director Kristalina Georgieva warned that high oil prices could last until 2027 even if fighting in the Gulf ends quickly. Tanker attacks hit a weekly record, and the cost of sending very large crude carriers to Asia jumped to $77 million, sharply raising supply-chain costs.
The U.S. dollar index rose about 0.4% to around 102.27, while the euro approached 1.12, a 17-month low. A stronger dollar and higher rates weighed on precious metals. Spot gold fell about 1.3% and touched an intraday low of $4,066, its lowest since Aug. 5. Spot silver dropped about 2.6%. As prices pulled back, the People’s Bank of China extended its gold-buying streak to 23 straight months, with reserves rising to 77.47 million ounces at the end of September. Peter Grant, a strategist at Zaner Metals, said the market is signaling that rates will stay higher for longer, supporting both the dollar and Treasury yields, while official-sector buying remains a medium-term support for gold.
Defensive sectors held up better as flows turned negative
Healthcare, consumer staples, and utilities stood out on a relative basis, while industrials and materials lagged. Goldman Sachs’ trading desk said flows were clearly skewed to selling on the day. Long-only funds showed a sell skew of -25%, concentrated in macro products and technology stocks, while hedge fund shorting rose to its highest level in nearly two weeks.
High-quality baskets rallied, and short baskets fell to their lowest level in more than two months. The market has started to reward companies with healthier balance sheets. Healthcare rose 1.06% and led the major U.S. sectors.
Barclays initiated coverage of medtech with an overall bullish stance. Christopher Pasquale named Stryker and Edwards Lifesciences as large-cap top picks, with price targets of $375 and $110, respectively. He set targets of $120 for Abbott, $85 for GE HealthCare, and $485 for Intuitive Surgical. In his view, medtech valuations are at their lowest in a decade, trading at the biggest discount to the S&P 500 since the peak of the tech bubble. The IHI ETF is down nearly 19% over the past five years, while the S&P 500 is up nearly 77% over the same period.
AI financing and chip expansion kept pulling in capital
The AI funding wave continued. Broadcom is seeking more than $50 billion in financing for custom AI chips being built for OpenAI. Apollo and Blackstone are among the firms in talks. Internally, the project is called Nexus, and the first- and second-generation chips carry the codenames Jalapeño and Serrano.
Oracle is also in talks with Apollo and Goldman Sachs over chip financing. SpaceX is seeking about $40 billion to buy NVIDIA chips, including roughly $10 billion in bank loans and $30 billion in investment-grade bonds. Apollo is expected to lead, with Pimco participating. Dan Ives of Yorkville Ives gave SpaceX an outperform rating and a $225 price target, saying debt financing tied to NVIDIA chip supply could strengthen the company’s launch, Starlink, and AI flywheel.
Goldman Sachs data showed Micron is expected to contribute 19% of S&P 500 earnings growth in the third quarter, while NVIDIA contributes 15%. Together, the two account for an increase roughly equal to that of the other 490 index members combined. Citadel’s Scott Rubner said, 「The stock market is not the economy, and it is becoming increasingly clear that the S&P 500 is not representative of ordinary stocks.」 Deutsche Bank’s Henry Allen warned that bonds and equities are pricing in 「fundamentally different macro regimes,」 a divergence he said is unlikely to last.
Samsung, TSMC, AMD, and OpenAI each added new catalysts
Samsung Electronics reported preliminary third-quarter operating profit of about KRW 107.4 trillion, up 783% from a year earlier and above KRW 100 trillion for the first time, extending its record streak to a fourth straight quarter. Revenue came in at about KRW 195 trillion, up 127% year over year but below expectations. The memory upcycle remains central to the story. Supply of conventional DRAM and NAND is tight, demand for HBM remains strong, and Counterpoint raised its forecast for third-quarter DRAM price gains to 10%-20% from 5%-10%. Douglas Kim of Douglas Research estimated Samsung’s HBM bit shipments rose nearly 50% from the previous quarter. Samsung will release full earnings on Oct. 29.
TSMC is due to report September revenue at 13:30. Its August revenue was about TWD 514.8 billion, up 53.3% year over year and 10.1% from July. Citi has placed TSMC on a 90-day positive catalyst watch and expects strong results.
AMD CEO Lisa Su visited South Korea for the second time in seven months and publicly confirmed for the first time that SK hynix will supply HBM4 for AMD AI accelerators. The MI455X carries 432GB of HBM4 per chip, up 50% from the previous generation. Su also said AMD is seeking cooperation with Samsung and SK hynix for 「three to five years or longer.」 Samsung wants to extend the HBM relationship into foundry work, but AMD is taking a cautious approach.
AI models and end devices also moved forward. OpenAI formally launched GPT-6, using Sol for paid users and Luna for free users, with stronger jailbreak defenses and a higher rejection rate for high-risk requests. Anthropic released Claude Haiku 5.5, cutting average operating cost by about 75% versus Haiku 4.5. Microsoft introduced the Surface Laptop Ultra with NVIDIA RTX Spark, starting at $2,599 and shipping on Oct. 16, and also launched an AI agent product called Scout. NVIDIA and Microsoft are working together to let AI agents run natively on Windows PCs. NVIDIA is also planning an additional $1 billion investment in humanoid robotics company Figure.
Single-stock moves showed a split market
Micron rose 4.06%. D.A. Davidson analyst Gil Luria lifted his price target to $3,000 from $2,100, saying the supply-demand imbalance in memory will last through 2027 and 2028. Storage-related names were mixed: SanDisk gained 1.92%, SK hynix fell 2.36%, and Western Digital lost more than 1%.
Caterpillar dropped 5.77%, the worst performer among blue chips. The U.S. Federal Trade Commission and the Department of Agriculture jointly announced an investigation into the market conduct of agricultural equipment manufacturers. Industrials fell 2.14%, with Honeywell down 2.24% and Sherwin-Williams off 1.95%.
TSMC fell 2.09%, while the Philadelphia Semiconductor Index lost 1.15%. Intel rose 0.55%, ARM fell 2.71%, Qualcomm lost 2.16%, ASML dropped 1.59%, and AMD slipped 0.55%. Broadcom added 0.19%, but optical communications names were broadly weaker, with Coherent down 1.12%, Lumentum off 1.97%, and Corning lower by 3.39%.
SpaceX fell 2.51%. The company is seeking $40 billion in financing to buy NVIDIA chips, with Apollo expected to lead and Pimco participating. Dan Ives reiterated an outperform rating and a $225 target. The space and satellite theme remained active, with Jeff Bezos saying Blue Origin could go public in the coming years and an FCC auction of 「golden spectrum」 seen as a possible tailwind for Amazon and SpaceX.
AMD fell 0.55%, Apple rose 0.91%, Microsoft added 0.09%, NVIDIA fell 0.74%, and Intel gained 0.55%. Dan Ives named Apple his top technology pick for 2027 with a $400 target, set a $650 target for Microsoft, and a $300 target for NVIDIA, which he called the 「foundational compute platform for the AI economy.」 Intel CEO Lip-Bu Tan said the company will continue working with Elon Musk on the Terafab project, though Musk is also discussing cooperation with TSMC, which weighed on investor sentiment.
Wolfspeed rose nearly 20% after the close. The U.S. Department of Defense is considering a $1.5 billion loan in exchange for warrants covering as much as 7.5% of the company’s equity to support domestic production of silicon carbide and power devices. That gave a policy boost to related silicon carbide and power semiconductor names.
Earnings season and Asia market volatility are also in focus
The next major test after bonds will be earnings. JPMorgan Chase, Citigroup, and Wells Fargo are due to report next Tuesday. Bob Doll of Crossmark said higher rates have already knocked valuation multiples down by three notches, though strong earnings have masked the effect. Mark Hackett of Nationwide said, 「The higher rates go, the less stocks are worth.」 Keith Lerner of Truist said small caps are more sensitive to rates. Steve Sosnick of Interactive Brokers said 2.2% GDP growth does not necessarily lift every stock at the same time.
In South Korea, the market saw what the report described as a 「liquidity vacuum.」 Samsung and SK hynix ended a combined $40 billion buyback program early after absorbing more than $25 billion of selling pressure on their own over the past two months. On the first day without that support, the KOSPI fell 2% and dropped below 7000, foreign investors sold a net $1.9 billion, Samsung fell 1.3%, and SK hynix lost 2.8%. Heather Oh of Goldman Sachs warned that earnings guidance, semiconductor ETF rebalancing, options expiration, and the end of buybacks could combine to trigger sharp moves in Samsung. Cho Junkee of SK Securities also said volatility could rise after the buyback support ended.
What to watch next
Oct. 8 (Thursday)
- 13:30: TSMC September revenue; Samsung has already released preliminary third-quarter results.
- Mainland China’s A-share market reopens. The central bank conducted CNY 1.2 trillion in outright reverse repos for a net injection of CNY 200 billion, and the Ministry of Finance will auction CNY 150 billion of five-year special government bonds.
- 20:30: U.S. initial jobless claims for the week ended Oct. 3.
- The Nobel Prize in Literature will be announced.
Oct. 9 (Friday)
- 1:00 a.m.: The U.S. will auction $22 billion of 30-year Treasuries maturing on Aug. 15, 2056, with a 5.125% coupon. The Treasury will then buy back as much as $6 billion of 20- to 30-year bonds. Strong demand could ease pressure on long-end rates for a time. Weak demand could put richly valued technology stocks under renewed strain.