U.S. stocks closed lower on Wednesday, ending a five-session winning streak as higher long-dated Treasury yields pressured risk assets. The Dow Jones Industrial Average fell 0.66% to 51,179.87, the S&P 500 lost 0.22% to 7,801.77, and the Nasdaq dropped 0.22% to 27,538.69. The VIX finished at 15.07.
The bond market set the tone for the session. The 10-year U.S. Treasury yield rose above 5.36% intraday, its highest level since 2002, while the 30-year yield climbed to about 5.73%, also reaching a 2002 high. The rise in long-end yields put pressure on high-valuation assets.
Strong 10-year auction briefly eased pressure in Treasuries
Some of that pressure eased after a $39 billion 10-year Treasury auction beat expectations. The high yield came in at 5.3%, the bid-to-cover ratio reached 2.77, the strongest since 2016, and non-dealer investors took 97.5% of the offering, a record. After the sale, selling in long-dated Treasuries briefly cooled and the 10-year yield at one point turned lower on the day.
The 2-year Treasury yield closed at 4.76%, down about 3 basis points on the session. The U.S. dollar index rebounded toward an 18-month high, while the euro approached a 17-month low.
In crypto markets, Bitcoin fell below $84,000 intraday, touching roughly $82,922. Ether dropped below $2,600.
Chip stocks diverged, with Micron up 4.06%
Semiconductor names moved in different directions. Micron Technology gained 4.06% to $1,088.00, Super Micro Computer rose more than 3%, and Nvidia posted a modest gain. The Philadelphia Semiconductor Index still closed down more than 1%. Meta, SpaceX AI, Qualcomm, and SK Hynix each fell more than 2%, while CrowdStrike dropped 4.81% to $265.44.
Moves among megacap technology stocks were mixed. Microsoft unveiled the Surface Laptop Ultra powered by Nvidia RTX Spark and demonstrated Windows running AI models and agents locally. Microsoft said response times for some local AI tasks could be as much as 2.1 times faster than Apple’s MacBook Pro M5 Pro. Amazon rose 1.42%, Google gained 0.81%, Apple added 0.91%, and Microsoft edged up 0.09%. Nvidia fell 0.74%, Tesla lost 0.75%, and Meta dropped 2.38%.
The Nasdaq Golden Dragon China Index was up about 0.1%. GDS Holdings gained 2.2%, while NIO, JD.com, and Li Auto each rose at least 1%. In Hong Kong, chip shares and large-model names both declined, with HG Semiconductor down 5% and MINIMAX down 4%.
Fed minutes showed most officials still see one more hike this year
Minutes from the Federal Reserve’s September meeting showed unanimous support for a 25-basis-point increase in the federal funds rate to 3.75%-4%. Most participants said another rate increase before year-end could be appropriate, but the record did not indicate that a series of back-to-back hikes had begun.
Nick Timiraos, often referred to as the “Fed whisperer,” said the minutes as a whole did not point to an appetite for repeated consecutive hikes. Nearly all officials said inflation remained elevated and the labor market was close to full employment. Some officials said AI could expand investment and lift productivity, but could also add to inflation pressure.
On the same day, the New York Fed’s Survey of Consumer Expectations showed median one-year inflation expectations rose to 3.9% in September from 3.6% in August, the highest since May 2023. Three-year inflation expectations increased to 3.3% from 3.2%. Consumers also reported an improved view of the labor market and a lower perceived probability of losing their jobs.
Iran comments and Hormuz warnings stayed in focus as oil and gold fell
On geopolitics, an Iranian official said Wednesday that the U.S. must first meet Iran’s conditions before any discussion of nuclear issues, adding that there were “no negotiations” between the two sides. Iran also reiterated that it would soon block what it described as “illegal” routes in the Strait of Hormuz until its demands were met. On Tuesday, Donald Trump said military action against Iran “must be wrapped up,” with the only question being whether that should happen in a softer or tougher way.
The International Energy Agency said member countries support accelerating the reserve-release plan announced in the joint action in March, with priority given to diesel reserves. The European Union said the release was mainly the delivery of an earlier commitment rather than new supply.
Oil turned lower during the session. WTI crude for November settled down 1.30% at $88.28 a barrel, a fresh low of more than one month. Brent crude for December fell 0.38% to $100.20 a barrel after rising above $102 intraday. Gold fell more than 2%. COMEX December gold futures settled about 1.1% lower at $4,140.7 an ounce, a two-month low, while COMEX December silver futures dropped about 2.1% to $60.29 an ounce.
Anthropic and OpenAI both rolled out major AI updates
Anthropic introduced Claude Haiku 5.5 and said average operating costs are about 75% lower than the previous generation. For requests under 100,000 tokens, both input and output prices were cut 90% from the prior model; for usage beyond 100,000 tokens, prices were reduced 50%. The company said the model can work with Opus 5.5 and Sonnet 5.5 as a “sub-agent.”
At the same time, people familiar with the matter said Anthropic could begin its IPO roadshow as early as the week of Nov. 9 and could start trading before Thanksgiving on Nov. 26.
OpenAI, for its part, rolled out GPT-6 to its global base of 1.2 billion ChatGPT users. Paid users receive GPT-6 Sol, while free users get GPT-6 Luna. Both models were classified as “high capability” in cybersecurity and biosecurity, and OpenAI said alignment evaluations were better across the board than GPT-5.6. The company also introduced an interactive visualization feature called “Smart UI,” allowing replies to include graphics, clickable buttons, forms, and charts.
OpenAI also released a large batch of mathematical research results generated by an undisclosed internal frontier model, including work related to zeros of the Riemann zeta function, and published part of the Lean formal verification code.
Separately, according to a report, SpaceX is in talks to raise about $40 billion to buy Nvidia AI chips. Roughly $10 billion would be raised through bank loans, with another $30 billion planned through investment-grade bond issuance. Apollo is expected to lead the financing arrangement.
Oracle data center project faces another power delay
Oracle’s Project Lighthouse data center in Wisconsin is at risk of delay after transmission approval was restarted. Total power demand for the project is about 1.3 GW. Aterio estimates that under its base case, full power delivery may be delayed until October 2028, and could slip to 2029 if the approval process drags on further.
After Project Jupiter in New Mexico issued a force majeure notice over electricity supply issues, this is Oracle’s second large AI data center project to run into trouble in a short period. The report said competition for AI capacity is expanding beyond chips and into power infrastructure, with transmission approvals and grid capacity emerging as new bottlenecks.
What markets are watching next
Two items are in focus next.
- U.S. initial jobless claims at 20:30 Beijing time. Fed minutes showed most officials still expect one more rate increase this year, while also suggesting there is no rush in October. If labor data remains firm, expectations for another hike this year could strengthen. Whether the 10-year Treasury yield can stay above 5.3% is a key variable.
- A $22 billion 30-year Treasury auction at 1:00 a.m. Beijing time on Thursday. Demand at Wednesday’s 10-year sale was notably strong, and the allocation to non-dealer investors set a record. Thursday’s long-bond auction will offer another test of investor appetite for duration and will directly affect long-end yields and the valuation backdrop for expensive technology shares.
The article was written by Chaoxiang Research.
