NEW YORK (AP) — Another crank higher in bond yields is rattling stock markets around the world on Thursday and helping to overshadow optimism that the artificial-intelligence industry can keep climbing.
The S&P 500 fell 0.2% after giving up an early gain and is heading toward its seventh loss in the last eight days. The Dow Jones Industrial Average was down 191 points, or 0.4% as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.1% lower.
The losses were even sharper in Europe, where bond yields saw a significant jump overnight. Stock indexes tumbled 1.6% in London and 1.3% in Paris after the yield on the 10-year U.K. government bond swung as high as 5.53% before falling to 5.37% and then charging upward again.
High yields slow the overall economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments.
Yields are on the rise for a range of reasons, including worries about high inflation and oil prices, signals that the U.S. economy remains solid and governments' insistence to continue to spend much more money than they bring in.
Those worries don’t look to be going away anytime soon, and oil prices climbed again Thursday to keep the pressure up on inflation. The price for a barrel of Brent crude jumped 3.3% to $101.24, continuing its swings on uncertainty about when the war with Iran will allow the global oil industry to return to normal.
Further reports also signaled the U.S. economy is powering through its many challenges. Fewer U.S. workers applied for unemployment benefits last week, which could mean fewer layoffs. That followed a report on Wednesday that said the U.S. economy’s overall growth was even stronger in the spring than earlier thought.
A separate report on Thursday said that growth for U.S. manufacturing also continued in September. Potentially more concerning in that report from the Institute for Supply Management, though, was that increases in prices accelerated, which could further pressure inflation.
The yield on the 10-year Treasury rose to 5.32% following the manufacturing report, up from 5.29% late Wednesday. That’s near its highest level since 2002, and it's up from less than 5% roughly a week ago and from less than 4% before the war with Iran began.
On Wall Street, strength for technology stocks helped limit the losses after Micron Technology delivered a stronger profit report for the latest quarter than analysts expected. The maker of memory chips for computers also said growth is strengthening, and it gave forecasts for upcoming profit and revenue that topped analysts’ estimates.
CEO Sanjay Mehrotra said it’s benefiting from the AI boom, which is driving demand for memory.
Micron’s stock fell 3%, which some analysts attributed to how much its stock had already jumped before the profit report. It came into the day with a gain of more than 270% for the year so far, towering over the less than 12% rise for the overall S&P 500.
But other AI-related stocks benefited from Micron’s optimism about continued demand related to AI. Nvidia rose 0.6%, and Applied Materials added 3.4%
Outside of tech, Accenture leaped 23.2% after the consulting and services company reported stronger profit for the latest quarter than analysts expected. It saw growth around the world, from the Americas to Asia.
In stock markets abroad, Asian indexes did better than the rest of the world thanks to optimism around AI following Micron’s profit report. Japan’s Nikkei 225 jumped 3.3%, and South Korea’s Kospi climbed 1.9%.
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AP Business Writers Yuri Kageyama and Michelle Chapman contributed to this report.
