U.S. equities extended their losing streak to a third session on Wednesday, pressured by a surge in oil prices above $100 a barrel and a climb in Treasury yields to their highest level in over a year. The Dow Jones Industrial Average dropped 405.41 points, or 0.77%, to close at 52,380.66. The S&P 500 declined 0.48% to 7,636.36, while the Nasdaq Composite slipped 0.64% to 26,253.34.
Treasury yields climb after debt buyback announcement
The 10-year Treasury yield rose to 4.857%, its highest since November 2023, after the U.S. Treasury Department said it would buy back up to $6 billion of longer-dated government debt—tripling the size of its usual operation. The announcement followed a decision last month to at least double the level of buybacks. However, some investors had expected an even larger operation, with estimates ranging from $7 billion to $10 billion. Higher yields on government bonds make equities less attractive by increasing the return on relatively low-risk assets.
The market is now focused on upcoming inflation data, with the Producer Price Index due Thursday and the Consumer Price Index on Friday. Traders are pricing in roughly a 60% chance that the Federal Reserve will raise interest rates at its meeting next week, according to CME FedWatch.
Oil rises above $100 as Middle East tensions escalate
Oil prices added to the pressure on stocks as concerns over disruptions to Middle East energy supplies intensified amid rising tensions between the U.S. and Iran. Brent crude futures settled 3.36% higher at $101.21 a barrel, while West Texas Intermediate futures gained 3.25% to $96.05. Both benchmarks recorded their highest settlements since May. The gains extend Tuesday's advance, when higher crude also weighed on equities. The S&P 500 energy sector was the only sector index to rise on Wednesday.
Meta gains while Alphabet and Dow fall
Some individual stocks moved against the broader trend. Meta shares rose after the social media company launched an AI assistant capable of performing tasks such as sending emails, selling a car, and making travel bookings. Alphabet shares declined after the Google parent announced plans to invest at least $15.1 billion in AI infrastructure in Finland over the next two years, including a major nuclear power supply agreement. The Philadelphia Semiconductor Index gained, with Advanced Micro Devices among the advancers. Shares of Dow Inc. fell after a Bloomberg News report said the chemicals company was considering exiting its $20 billion partnership with Saudi Aramco.
The S&P 500 ended about 2% below its Aug. 13 record close but remained roughly 12% higher for 2026. With oil prices above $100 and Treasury yields near their highest levels in almost three years, investors are now looking to inflation data for signals about the Fed's next move. As yields ease from multiyear highs in other sessions, the current spike underscores the market's sensitivity to inflation and rate expectations.
For context, the Dow rebounded 299 points earlier this month when yields retreated, highlighting the inverse relationship between bond yields and equity valuations. Meanwhile, gold dropped below $4,300 as oil and yields pressured the metal despite geopolitical tensions. The energy sector's resilience, however, suggests that oil's rise is being driven by supply concerns rather than broad demand strength.
Investors will also be watching the Norway's $2.3T fund proposal to cut $75B in U.S. Treasury holdings, which could add to upward pressure on yields if implemented. As the market digests these developments, the upcoming inflation reports will be critical in shaping the Fed's policy path.
This article is for informational purposes only and does not constitute financial advice.
