Pressure from the bond market hits a new level, and US stocks slide on
worries about inflation
[September 24, 2026] By
STAN CHOE
NEW YORK (AP) — Pressure from the U.S. bond market hit a new level on
Wall Street Wednesday after a surprisingly strong report on the economy
raised worries about inflation, while oil prices halted their slide. The
squeeze caused U.S. stocks to sink.
The S&P 500 fell 0.8% after finishing the prior day just 0.4% below its
record set last month. The Dow Jones Industrial Average dropped 352
points, or 0.7%, while the Nasdaq composite sank 1.1% from its own
all-time high.
Stocks wilted after the yield on the 10-year Treasury jumped to 5.10%
from 4.96% late Tuesday, which is a considerable move for the bond
market. High yields undercut prices for stocks and other investments,
while also slowing the economy by making it more expensive for everyone
to borrow money.
Wednesday’s jump briefly sent the 10-year yield near 5.14%, back to
where it was in 2007 before the global financial crisis caused yields to
crater. Yields have been climbing since bottoming out in the COVID
pandemic, and they’ve accelerated recently because of worries about high
inflation, the U.S. government’s heavy debt and other concerns.
Worries about inflation got a jolt Wednesday morning after a preliminary
report suggested growth in U.S. business activity surged to its
strongest level in more than five years. That’s an encouraging signal,
to be sure, but it indicates the economy may have plenty of fuel for
more inflation.
The report also suggested costs for businesses are leaping at the
fastest rate in four years, in part because of more expensive oil,
according to Chris Williamson, chief business economist at S&P Global
Market Intelligence. That could mean businesses will pass those higher
costs onto their customers in coming months.
Oil prices are high because of worries that the war with Iran will keep
oil bottled up in the Middle East for a long time.
The price for a barrel of Brent oil to be delivered in November rose
3.9% to $103.08 on Wednesday. That reversed a decline for Brent, which
had been falling since it neared $110 last week. Talks are continuing
with mediators between U.S. and Iranian officials, but nothing concrete
has come from it yet.
Brent oil to be delivered in December, where most of the trading in the
market has moved, rose 2.8% to $98.12 per barrel.
Even with its recent decline, the price for a barrel of Brent remains
much higher than the roughly $72 it cost before the war with Iran began.
Inflation has remained so stubbornly high that the Federal Reserve
raised its short-term interest rate last week for the first time in
three years in hopes of slowing down increases in the cost of living.
Fed Gov. Michael Barr said in a speech on Wednesday that further hikes
“are likely to be needed” to get inflation to the Fed’s 2% target.
Traders now see better than a 50% probability that the Fed will hike its
federal funds rate at each of its next two meetings, in October and
December, according to data from CME Group.
[to top of second column] |
Justin Kanda works on the floor at the New York Stock Exchange in
New York, Monday, Sept. 14, 2026. (AP Photo/Seth Wenig)
 So far, strong growth in profits for
U.S. companies has helped support the U.S. stock market despite
higher interest rates and more expensive oil.
KB Home became the latest to deliver a stronger profit for the
latest quarter than analysts expected. But its stock nevertheless
swung between losses and gains after the homebuilder’s executive
chairman said conditions got even tougher for the industry over the
last three months. It finished with a loss of 3%.
Potential customers are becoming more cautious because of higher
mortgage rates caused by the rise in the 10-year Treasury yield.
They also are feeling pressure from “geopolitical uncertainty and
broader economic headwinds,” Jeffrey Mezger said.
General Mills likewise reported a stronger profit for the latest
quarter than analysts expected. But the company behind the Cheerios
and Progresso brands said it also expects growth this fiscal year to
fall below its historical track record “driven by a continued
challenging consumer backdrop,” and it did not raise its forecast
for profit over the full fiscal year.
Its stock flipped between gains and losses before rising 1%.
All told, the S&P 500 fell 58.61 points to 7,706.03. The Dow dropped
352.10 to 51,511.59, and the Nasdaq composite sank 308.24 to
26,936.04.
In stock markets abroad, indexes slipped across much of Europe and
Asia.
Stock indexes fell 1% in Hong Kong and 0.4% in Shanghai ahead of
Chinese President Xi Jinping’s state visit to Washington, which is
kicking off Wednesday.
The leaders are expected to attempt to steady fragile ties in their
third meeting since Trump returned to the White House. That is
despite the world’s two largest economies seeking the upper hand on
artificial-intelligence developments and trade, while pushing for
leverage in persistent hot spots like Iran and Taiwan.
___
AP Business Writers Chan Ho-him and Michelle Chapman contributed to
this report.
All contents © copyright 2026 Associated Press. All rights reserved
 |
