US stocks clawed back morning losses Thursday as retreating Treasury yields and renewed enthusiasm for semiconductor shares helped stabilize a volatile start to October. The Dow Jones Industrial Average closed just above the flat line, while the S&P 500 gained 0.2%.
The Nasdaq Composite also finished slightly higher after technology shares recovered during the session. The turnaround came after stocks fell to their lows as long dated bond yields climbed and investors weighed another jump in oil prices.
The 10 year Treasury yield eased to 5.24% after reaching 5.3% earlier Thursday, a new multidecade high. The bond market had just endured its worst quarter in decades, leaving stocks sensitive to each move in borrowing costs.
Micron provided the strongest lift for semiconductor shares after the memory company reported fourth quarter earnings that exceeded Wall Street expectations. Micron also raised its outlook for the first quarter, sending its shares higher and helping chip stocks lead the technology sector’s advance.
The market nevertheless remained burdened by persistently elevated Treasury yields and oil prices. Those pressures have repeatedly competed with investor enthusiasm surrounding artificial intelligence and the major technology and semiconductor companies tied to that trade.
Technology stocks received another boost from a Bloomberg report that Anthropic was considering an initial public offering as soon as the middle of November. The report helped lift the sector during midday trading as the broader indexes recovered.
Investors also confronted another example of the financial ties connecting major artificial intelligence companies. Reuters reported that Broadcom is lending $42 billion to Anthropic, which is estimated to become the chip designer’s largest compute customer by next year.
Labor market data offered signs of continued stability before Friday’s monthly jobs report. Initial jobless claims declined for a fourth consecutive week, while Challenger, Gray & Christmas reported that planned layoffs fell in September, although companies were not rushing to hire.
Federal Reserve Vice Chairman Philip Jefferson took a more cautious position than several colleagues during remarks at the University of Virginia in Charlottesville. He acknowledged that inflation remained too high while arguing that officials should monitor whether rising long term bond yields help bring inflation down in a timely manner.
Bank shares remained under pressure as the sharp rise in interest rates over the previous month intensified investor concerns. The KBW Nasdaq Bank Index fell as much as 2.4% before trimming its decline to 0.7% below Wednesday’s close.
The index had retreated to its level from late May and stood more than 13% below its peak in the middle of August. Citigroup shares dropped 1.9%, PNC declined 1.8%, and Bank of America fell 1.4%.
Manufacturing data added to inflation concerns. The S&P 500 Manufacturing Purchasing Managers Index reached 55.9 in September, up from 53.9 in August but below the preliminary estimate of 57.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said manufacturing growth accelerated as new orders encouraged factories to increase output and hiring. He also said demand exceeding supply meant inflationary pressures remained present, adding to speculation about the Federal Reserve’s next interest rate decision.
The Institute for Supply Management reported an expansion in manufacturing, with its index registering 54.5% in September. That was 0.1 percentage point below August, while the prices paid index surged to 77.9%, a 6.8 percentage point increase and well above the expected reading of 72.
Energy shares held up better than the broader market as crude prices rose following reports that China suspended October fuel exports. Brent crude jumped 3% to exceed $100 per barrel, while the US benchmark climbed to $92 per barrel.
Macquarie’s Thierry Wizman argued that the conflict between the US and Iran was contributing to elevated bond yields through inflation, deficits, and larger government borrowing needs. Figures submitted to Congress by the Pentagon showed the US government had spent at least $43.6 billion, although outside research institutions estimated that the total could be higher.
Basic materials shares also appeared sharply weaker, but the move was distorted by an 84% decline in Corteva. That drop reflected Corteva’s division into two companies rather than a dramatic destruction of value, adding another unusual element to an already choppy session.