U.S. stocks closed lower for a third straight session on Wednesday as higher oil prices and a smaller-than-expected Treasury buyback weighed on sentiment. The Dow Jones Industrial Average fell 0.77% to 52,380.66, the S&P 500 slipped 0.48% to 7,636.36, and the Nasdaq dropped 0.64% to 26,253.340. The VIX rose about 4.4% to 16.41.
Storage and optical communications shares pushed higher again, and Meta stood out with a 6.55% gain after launching its AI assistant Muse. Apple also introduced its first foldable iPhone, while investors turned their attention to U.S. August PPI data and the European Central Bank rate decision due later.
Treasury buyback undershoots some expectations, long yields rise
The U.S. Treasury said Wednesday it would repurchase up to $6 billion of Treasuries maturing in 10 to 20 years on Thursday. That was nearly triple the earlier size, but still below the $7 billion to $8 billion range that some Wall Street investors had expected, according to a Bloomberg survey. The gap triggered selling in the bond market.
The 10-year Treasury yield rose 4.84 basis points to 4.839% and touched 4.849% intraday, the highest level since November 2023. The 2-year yield gained 2.54 basis points to 4.419%, a 52-week high. The 30-year yield added 4.35 basis points to 5.291%. The broad move higher in yields put direct pressure on richly valued assets.
According to Chaoxiang Research, the expanded buyback was meant to push down long-end yields and ease valuation pressure on technology stocks, but the final size came in below expectations and instead added to concern that the Treasury may have limited room to act. The note said long-end rate pricing still depends on the inflation path and debt supply, with buybacks offering only short-term liquidity relief.
Brent tops $101 as Middle East tensions intensify
Geopolitical risk formed the other main drag on Wednesday. Iran's Islamic Revolutionary Guard Corps announced a new maritime "sanctions zone." The U.S. military struck an Iranian oil tanker, and Iran attacked a U.S. military base, according to the source article.
Brent crude settled up 3.36% at $101.21 a barrel, the first close above $100 in more than a month. WTI crude rose 3.25% to $96.05 a barrel. Both reached their highest levels since May.
Energy was the only S&P 500 sector to finish higher, up 1.09%. Industrials and consumer discretionary led the declines, falling 1.51% and 1.39%, respectively.
After the close, Donald Trump told media outlets that he expected the war with Iran to end after the U.S. midterm elections in November this year, and that an oil price pullback would "take a bit longer than the midterm elections."
Meta jumps on Muse launch, storage and optical communications stocks rally
Large-cap technology stocks were broadly weaker as the wider market came under pressure. Nvidia fell 0.91%, Apple lost 0.28%, Microsoft dropped 0.47%, Amazon fell 1.78%, Alphabet Class C lost 2.09%, Tesla slipped 0.1%, and Broadcom declined 1.13%.
Meta was the exception. The stock climbed 6.55% after the company formally unveiled Muse a day earlier, a personal AI agent designed to complete tasks such as sending emails and booking travel on behalf of users.
Storage and optical communications names also surged. SK Hynix rose 7.05% to a record high, Micron Technology gained 2.75%, SanDisk added 1.51%, and Western Digital rose 1.04%. In optical communications, MaxLinear climbed 7.53%, Marvell Technology advanced 4.26%, and Corning gained 1.51%.
Among constituent stocks in the group, 18 rose and 12 fell. AMD gained 3.04%, Intel added 1.69%, and Qualcomm rose 1.33%.
Chaoxiang Research linked the strength in storage and optical communications to product progress at companies including SK Hynix and continued market attention on AI memory demand. The divergence between a falling broader market and rising chip shares has now lasted for three straight sessions.
Among Chinese stocks listed in the U.S., the Nasdaq Golden Dragon China Index fell 2.09%. Li Auto dropped 4.41%, XPeng fell 3.29%, and Alibaba lost 2.89%.
Apple unveils foldable iPhone Duo starting at $1,999
Apple introduced its first foldable flagship smartphone, the iPhone Duo. In its unfolded state, the device is described as the thinnest iPhone ever. It has a dual-camera setup and a 7.6-inch Super Retina XDR display when open, 50% larger than the iPhone 18 Pro Max. It supports Apple Pencil, and the global version supports eSIM only.
The starting price is $1,999 globally and RMB 15,999 in China.
Chaoxiang Research said Apple's entry marks its formal move into the foldable phone segment. Samsung previously held a dominant position in that market, and Apple's arrival could reshape the global foldable supply chain. Apple shares edged down 0.28% on the day as the market continued to assess the longer-term effect of the product.
Gold reclaims $4,400, copper prices hit record highs
Spot gold rose 1.06% to $4,401.77 an ounce, reclaiming the $4,400 level. Spot silver gained about 2.3%. Data from the World Gold Council showed global gold ETFs attracted $18 billion in August, the second-largest monthly inflow on record.
In industrial metals, London copper closed at $14,728 a ton and touched $14,779 intraday, while New York copper reached $6.894 a pound. Both set fresh record highs. Chaoxiang Research said demand from AI computing infrastructure and global grid investment continued to lift copper prices.
In crypto markets, bitcoin traded around $79,200, up about 1% over 24 hours, while ether was around $2,500.
What markets are watching next
U.S. August PPI is the key economic release later today. Chaoxiang Research said PPI is a leading indicator for CPI. A stronger-than-expected reading could deepen concerns about rate hikes, while a softer result may ease some inflation pressure. Oil's move back above $100 has also added a new upside risk for inflation.
The European Central Bank rate decision is also due. Markets expect the ECB to raise rates by 25 basis points. According to Chaoxiang Research, the ECB's rate path will affect the euro and the dollar and then feed through to U.S. Treasuries and equities.