US stocks opened lower Thursday as a historic selloff in Treasury bonds continued to dominate markets, with the 30-year yield touching its highest level in more than two decades.
The Dow Jones Industrial Average fell 179.66 points, or 0.35%, to 51,331.93 shortly after the opening bell.
The S&P 500 dropped 0.48% to 7,669.46, while the Nasdaq Composite fell 0.74% to 26,737.60.
The small-cap Russell 2000 slipped 0.21%.
The CBOE Volatility Index jumped 4.55% to 15.87, signalling rising investor unease.
The real story is in the bond market
The 30-year Treasury yield surged to 5.44% on Thursday, its highest level since July 2004, after S&P Global’s flash PMI data showed US business activity running far hotter than expected.
Manufacturing printed 57.0 against a forecast of 53.6, while services came in at 58.7 versus an expected 55.8, both consistent with the economy expanding at its fastest pace in more than five years.
The 10-year yield also touched its highest level since before the 2008 financial crisis, standing at 5.098%, while the 2-year yield held at 4.852%.
Every point on the Treasury curve except the two-year now trades above 5%, a threshold last seen broadly during the 2007-08 crisis.
A Treasury buyback of up to $6 billion in 20- and 30-year bonds, announced Wednesday, failed to slow the move.
The reversal caps a dramatic 40-year arc for bond markets.
After Federal Reserve Chair Paul Volcker pushed the 30-year Treasury yield above 15% in the early 1980s to break inflation, yields spent four decades in decline, creating a tailwind that shaped entire investment strategies.
That trend reversed in 2022, the worst year for Treasuries in six decades, and has now accelerated to levels unseen in more than 20 years.
What’s driving the stock market lower
Rising yields are pressuring equities directly, since higher borrowing costs weigh on company valuations and consumer spending alike.
Micron fell 2.18% to $1,048.51, among the session’s weaker large-cap movers, as investors positioned ahead of its fiscal fourth-quarter earnings report due September 30, with rising yields adding further pressure to richly valued chip stocks.
Nvidia fell 1.23% to $222.74, and SanDisk dropped 2.30% to $1,774.73, both consolidating after a strong recent run.
Meta Platforms rose 1.34% to $754.11, continuing to outperform as investors await the second day of its Meta Connect developer conference.
Apple slipped 0.50% to $335.34, Amazon fell 1.31% to $246.00, and Alphabet dipped 0.34% to $336.70.
Oil and gold diverge
Crude oil moved sharply higher even as bond yields spiked, an unusual combination.
WTI crude rose 2.08% to $94.08, and Brent climbed 2.23% to $105.38, as the market continued digesting supply-side developments in the Middle East.
Gold fell 0.16% to $4,311.47, and silver dropped 1.70%, pressured by the same rising-yield dynamic hitting equities, since higher yields increase the opportunity cost of holding non-yielding assets.
Thursday’s session underscores how completely the bond market has taken over as the market’s central story this week, overshadowing individual earnings and stock-specific catalysts.
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