US stocks retreat as bond yields rise and energy outperforms
US equities slipped for a second consecutive session on Wednesday, with the Dow Jones, S&P 500, and Nasdaq each declining between 0.25% and 0.33%. The weakness was driven by technology, industrials, pharmaceuticals, and telecoms, while energy and consumer staples managed to outperform.
Despite a strong lead from Asian markets and mixed sentiment in Europe, investor caution persisted as US Treasury yields continued to climb after last week’s Federal Reserve rate cut, boosting the US dollar.
Meanwhile, oil prices provided further support for energy stocks, with WTI crude rising 2.5% on the day and 4% so far this week, reaching the higher end of its recent trading range.
Company news driving market moves
Corporate headlines dominated several notable stock moves.
Freeport-McMoRan dropped 17% after declaring force majeure at its Grasberg mine in Indonesia due to mudflows that disrupted production. The company expects Q3 copper and gold sales to fall 4% and 6% respectively. Operations may gradually resume in the first half of 2026, with production potentially 35% lower.
Micron Technology slipped nearly 3% despite issuing a stronger-than-expected revenue forecast.
Oracle lost 1.5% after confirming plans to raise $15 billion through bond sales, slightly cooling its 85% rally this year.
Still, analysts remain broadly optimistic. S&P 500 earnings are projected to climb 7.7% year-on-year in Q3, with technology and semiconductor companies leading the gains.
Global market update
Here’s a snapshot of how major global markets performed and the key macroeconomic themes influencing investor sentiment.
Asian markets
Asian stocks eased on Thursday as investors locked in profits ahead of month- and quarter-end positioning. MSCI’s Asia-Pacific index outside Japan fell 0.2%, while Chinese blue chips were steady and Hong Kong’s Hang Seng slipped 0.2%. Japan’s Nikkei 225 edged up 0.1%, sustaining strong quarterly momentum despite growing caution.
US futures
Overnight, US futures ticked slightly higher, with the S&P 500, Nasdaq 100, and Dow futures up about 0.1%. Gains were capped by concerns about a possible government shutdown, as political deadlock in Washington persists.
European equities
In Europe, markets were largely flat. The STOXX 50 and STOXX 600 finished at near unchanged levels. Luxury names including LVMH, Hermès, Ferrari, L’Oréal, and EssilorLuxottica fell 1.5–3%, offset by gains in oil majors ENI and TotalEnergies (up 2%) and defence stocks such as Leonardo, Thales, SAAB, and Rheinmetall (up 3–6%).
Currencies and commodities
The US dollar index held above 97.8, rebounding as investors awaited fresh labour and inflation data to guide Fed policy. EUR/USD traded near 1.1750, reflecting uncertainty over the pace of future rate cuts and political risks.
Oil prices slipped modestly in Asia after surging to seven-week highs. Brent crude fell 0.3% to $69.09, while WTI declined 0.4% to $64.72 per barrel. A surprise 607,000-barrel drop in US crude inventories and rising geopolitical risks around Russia continued to support the market.
Stocks in focus
Semiconductor and AI developments
TSMC announced breakthroughs in chip design using AI, improving energy efficiency by up to 10x. By combining smaller chiplets and using tools from Cadence and Synopsys, complex designs are completed faster than human-led processes.
Qualcomm launched its Snapdragon X2 Elite laptop processor with advanced security features designed for enterprise users. The chip includes a remote management tool called Guardian that uses 5G connectivity to update devices even when powered off.
Intel reportedly approached Apple for potential investment and collaboration, aiming to regain competitiveness in the AI chip race. Talks are in early stages and may not result in a deal.
Big tech and cloud investments
Oracle is planning a $15 billion debt sale to fund its cloud expansion and AI infrastructure. The company has increased spending to support contracts with firms like OpenAI. Proceeds may also be used for stock buybacks, acquisitions, or general corporate purposes.
Alibaba surged over 8% after announcing plans to increase AI infrastructure investment and launching new data centres across Europe, Latin America, and Asia. The company also introduced two new advanced AI models: Qwen3-Max and Qwen3-Omni.
Resource and financial sector updates
Freeport-McMoRan expects third-quarter copper and gold sales to decline 4% and 6% respectively due to disruptions at its Indonesian mine. Full production may not resume until the first half of 2026, with potential 35% lower output levels.
Citigroup will sell a 25% stake in Banamex to Mexican billionaire Fernando Chico Pardo for $2.28 billion, valuing the bank at $9.12 billion. The deal is expected to close in the second half of 2026 and supports Citi’s Latin America exit. Pardo will become chair, with Manuel Romo remaining CEO.
Other notable moves
SAP partnered with OpenAI to launch a sovereign AI service for Germany’s public sector. The project, supported by Delos Cloud on Microsoft Azure, is set to launch in 2026. It is backed by SAP’s €20 billion digital investment. Morgan Stanley reaffirmed SAP as Overweight, noting that while FY26 cloud growth forecasts were slightly trimmed, long-term drivers remain intact.
TotalEnergies secured a €4.5 billion offshore wind project in Normandy, France, its first such award in the country. The 1.5 GW wind farm will supply electricity to one million households, with production expected to begin in 2033.
Altice France is exploring a potential sale of its SFR Business unit to cut debt. The unit offers services including cloud, connectivity, and cybersecurity, and could attract interest from competitors or private equity.
Analyst ratings
Wells Fargo upgraded Amazon to Overweight from Equal Weight, with a new price target of $280. The bank cited AWS growth driven by Project Rainier and a partnership with Anthropic. It raised earnings estimates through 2028, forecasting EPS of $11.52, while highlighting potential risks from scaling AI.
BofA Securities upgraded Schneider Electric to Buy, raising its price target to €265, citing strong data centre growth, steady margins, and attractive valuation. EPS is projected to rise from €8.23 in 2025 to €11.40 by 2027, alongside growing free cash flow and dividends.
Morgan Stanley upgraded ServiceNow to Overweight with a $1,250 price target, highlighting strong subscription growth and AI-driven automation. Despite risks around federal spending and AI competition, the company shows strong early traction.
Morgan Stanley downgraded Adobe to Equal-weight from Overweight, lowering its price target to $450. The bank cited uncertainty around generative AI monetisation, slower Digital Media ARR growth, and lack of near-term catalysts.
Jefferies downgraded Vistra Corp to Hold from Buy, cutting its target to $230, citing valuation concerns and delays in the Comanche nuclear contract. Despite raised 2026 EBITDA estimates, the outlook was tempered by reduced deal expectations.
Key data and events ahead
Investors are watching closely for today’s US economic releases, including:
- August durable goods orders
- Q2 annualised GDP growth
- Initial jobless claims
- Wholesale inventories
- Housing market figures, including existing home sales
Earnings season continues, with results due from Costco, Accenture, and CarMax.
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