US stocks rally to their best day in 6 weeks after oil prices and bond
yields ease
[September 18, 2026] By
STAN CHOE
NEW YORK (AP) — The U.S. stock market rallied to its best day in six
weeks Thursday after falling oil prices and easing pressure from the
bond market helped Wall Street reverse many of its moves from the prior
day.
The S&P 500 jumped 1.1% for just its second rise in the last nine days.
The Dow Jones Industrial Average added 316 points, or 0.6%, and the
Nasdaq composite climbed 1.7%.
Stocks got a boost after the price for a barrel of Brent crude oil slid
1% to settle at $104.82. That’s down from the nearly $110 it reached
earlier in the week on worries that the war with Iran will keep oil
bottled up in the Middle East instead of going to customers worldwide.
Brent is of course still much more expensive than the $72 per barrel
that it cost earlier this summer, but Thursday’s drop helped pull yields
lower in the bond market and removed some pressure on stocks. The yield
on the 10-year Treasury fell to 4.93% from 5.01% late Wednesday.
Higher yields make it more expensive for everyone to borrow money, from
the U.S. government to people looking to buy houses to businesses
wanting to build data centers. That in turn slows the economy.
The Federal Reserve on Wednesday raised the short-term interest rate
that it controls, the federal funds rate, by a quarter of a percentage
point for its first hike in more than three years. Officials also
signaled they may raise the federal funds rate one more time this year
as they try to get the nation’s high inflation under control.
The signals sent Wall Street on a roller coaster. Stocks initially
remained higher for the day after the Fed made its announcement
Wednesday. They then slid sharply before recovering a chunk of the
losses before trading ended.
On the upside for markets, the shift to higher interest rates built
confidence that the Fed is committed to getting inflation back to its
target of 2%. Questions had begun to bubble earlier about whether it
would feel pressure from President Donald Trump, who is calling for
lower interest rates. And the short-term cost of pain for the economy
could be worth it if it gets inflation under control following years of
its staying too high.
On the downside for markets, higher rates undercut prices for stocks and
other investments. When investors earn more in interest from bonds,
which are considered safer investments, they’re less willing to pay high
prices for other investments. That’s beyond the slowing effect that
higher rates have on the economy in hopes of removing fuel for
inflation.
Some reports on Thursday signaled the U.S. economy may be strong enough
to withstand higher interest rates. One said fewer U.S. workers applied
for unemployment benefits last week. Another said that manufacturing
growth in the mid-Atlantic region was stronger than economists expected.
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Traders work on the floor at the New York Stock Exchange in New
York, Wednesday, Sept. 16, 2026. (AP Photo/Seth Wenig)
 Fed Chairman Kevin Warsh said
Wednesday that a strengthening economy is one of the reasons Fed
officials moved to raise interest rates after keeping them on hold
earlier this year.
He also cited “geopolitics,” along with the threat that the
increases in prices it’s causing could filter out and push up
inflation elsewhere. That’s likely a nod to the war with Iran and
its effect on oil prices.
On Wall Street, stocks in the artificial-intelligence industry
continued to rebound following their worldwide slide on Monday.
Nvidia climbed 2.5%, and Advanced Micro Devices rose 6.4%.
That was even though OpenAI disclosed six more reports of
“unexpected or concerning” behavior in AI models. Leaders of the AI
industry over the weekend called for a slowdown in development to
address safety issues for humanity
Stocks of several homebuilders also rose, even though a report
showed the industry broke ground on fewer new homes last month than
economists expected. The housing industry has been one of the
hardest hit by the climb for the 10-year Treasury’s yield, which
topped 5% this week for the first time since 2023 and has pulled
mortgage rates higher.
Thursday’s ease in yields helped D.R. Horton rise 1.5%, while
PulteGroup added 1.1%. Rival Lennar erased an early loss and climbed
1.7% after reporting weaker profit and revenue for the latest
quarter than analysts expected.
All told, the S&P 500 rose 85.95 points to 7,637.76. The Dow Jones
Industrial Average gained 316.14 to 51,778.04, and the Nasdaq
composite rallied 439.87 to 26,418.30.
In stock markets abroad, indexes rose across much of Europe
following a weaker finish in Asia.
London’s FTSE 100 climbed 1.2% after the Bank of England decided to
keep its interest rates on hold.
___
AP Business Writers Chan Ho-him and Michelle Chapman contributed to
this report.
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