By Noel Randewich and Niket Nishant
Sept 10 (Reuters) - U.S. stocks ended down on Thursday after producer price data for August and surging oil prices stoked worries the Federal Reserve will hike interest rates next week, while climbing Treasury yields made stocks less attractive.
Heavyweight chipmakers lost ground, with Nvidia and Micron Technology weighing on the S&P 500. Apple rallied a day after launching a $1,999 iPhone.
With supply routes through both the Strait of Hormuz and the Red Sea disrupted
by the U.S.-Israeli war on Iran, Brent crude jumped 6% to $107 a barrel, adding to inflation worries and fueling expectations the Fed will raise interest rates at its policy meeting on Wednesday.
Yields on 10-year Treasury notes rose to their highest in nearly three years, while 30-year Treasury yields hit their highest in more than 19 years and 2-year Treasury yields reached their highest in more than two years.
"Yields are going up at the short end of the curve because the Fed is probably going to hike in the next couple months. Yields are going up at the long end of the curve because of debt and deficit issues, and sticky inflation," said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky.
"Higher yields are a negative for the equity market. They lower valuations and they make it more expensive to operate a business, and more expensive for consumers to exist in the world."
Data on Thursday showed the U.S. producer price index (PPI) increased in line with expectations in August on a monthly basis amid a rebound in the cost of energy products. Investors will pay close attention to Friday's August consumer price data.
According to preliminary data, the S&P 500 lost 44.16 points, or 0.58%, to end at 7,592.20 points, while the Nasdaq Composite lost 167.15 points, or 0.64%, to 26,086.19. The Dow Jones Industrial Average fell 313.64 points, or 0.60%, to 52,067.02.
Traders now see a 70% chance the Federal Reserve will raise interest rates by at least 25 basis points next week, up from about 64% before Thursday's report, the CME FedWatch tool showed.
Following recent declines, the S&P 500 is down nearly 3% from its record high close on August 13, and it remains up 11% in 2026.
The S&P 500's recent decline, coupled with a strong earnings outlook, has the benchmark trading at 19 times expected earnings, its cheapest since April 2025, when U.S. President Donald Trump's "Liberation Day" tariff announcements threw global markets into a tailspin.
In Thursday's trading, Macy's fell. The struggling department-store operator raised its annual forecasts, but not by enough to impress investors.
American Eagle Outfitters dropped to its lowest since October as the apparel maker reiterated its annual comparable sales forecast amid choppy discretionary spending.
(Reporting by Niket Nishant, Tharuniyaa Lakshmi and Johann M Cherian in Bengaluru, and by Noel Randewich in San Francisco; Editing by Sherry Jacob-Phillips, Maju Samuel and David Gregorio)
