Wall Street Stocks Fall as Brent Hits $116 and 10-Year Yield Nears 5%
Wall Street stocks fell on 23 October as Brent crude hit $116.72, its highest since 2022, and 10-year yields neared 5% ahead of next week's Fed meeting.
A jump in Brent crude to its highest level since June 2022 and rising Treasury yields knocked Wall Street stocks lower on Friday, 23 October, with the Dow shedding 652.82 points.
The Dow Jones Industrial Average ended 1.2% down at 52,215.16. The S&P 500 gave up 39.75 points, or 0.5%, to 7,623.68, and the Nasdaq Composite, modestly higher earlier in the day, closed 0.2% lower at 25,955.34, the Associated Press reported.
Nearly three in every four S&P 500 stocks ended lower. For the week, the S&P 500 fell 0.5% for a second straight weekly loss and the Nasdaq lost 0.7%. The Dow was the only major index to finish higher, up 0.4%.
Brent crude and bond yields weigh on Wall Street stocks
Brent crude settled at $116.72 a barrel, up 3.1% on the day. It was trading under $97 when October began. US benchmark West Texas Intermediate gained 3.8% to $103.27 and is up 14% so far this month, according to Kiplinger.
The rise in oil reflects the US war with Iran, which AP reported has sharply cut global supply and pushed up the cost of fuel, food and clothing. Iran said it was “prepared to attack” if the US and Israel resumed strikes on Tehran, Kiplinger reported.
Bond markets added to the pressure. The 10-year Treasury yield rose to about 5%, with Kiplinger putting the close at 5.001% and AP at 4.99%. The 2-year yield climbed to 4.686% and the 30-year to 5.329%.
Energy shares outperformed, with Chevron up 2.9% and ConocoPhillips up 3.6%. Chipmakers Micron, AMD and Intel also gained, rising between 1.7% and 2.5%.
American Express was the Dow’s worst performer, down 3.7% after announcing it would cut about 5% of its workforce. Caterpillar lost 2.4%, while JPMorgan Chase and Citigroup each fell 1.5%. Bloom Energy dropped 11.2% despite beating estimates, as investors focused on its negative cash flow.
Concerns over artificial intelligence spending also lingered after big technology results earlier in the week. “Investors appear increasingly focused on the economics of AI,” Angelo Kourkafas, senior global strategist at Edward Jones, wrote in a note cited by AP.
Fed meeting next week and the 10-year Treasury yield
The Federal Reserve’s policy committee meets on 27–28 October. Markets widely expect it to hold rates, though traders lean heavily towards another increase in December.
At its September meeting, the Fed raised the federal funds target range by a quarter point to 3.75–4%, in a 12–0 vote, saying inflation “remains elevated”. A 10-year Treasury yield near 5% raises borrowing costs for companies, homebuyers and the US government alike.
The September personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, is expected to show a 3.7% annual rate, well above the central bank’s 2% target. BMO Chief Economist Douglas Porter said recent readings had been “on the warm side” and expects rate hikes in December and March, according to Kiplinger.
Earnings will also steer Wall Street stocks. Alphabet, Microsoft, Amazon and Caterpillar are among the companies due to report next week, and investors will look for evidence that heavy AI investment is producing returns.
What it means for India
For Indian businesses and investors, the oil move matters more than the equity sell-off. India imports most of the crude it consumes, so Brent above $116 raises the import bill and can add to pressure on the rupee and on inflation.
Indian equities were already under strain. The Nifty closed at 22,600 on 23 October, its fourth straight session of losses, according to Business Standard. Higher US yields can also make emerging-market assets less attractive to foreign portfolio investors.
Further Fed tightening would leave little room for relief on either front. Readers can follow developments in our business news section, and the Fed’s September decision is set out in its official policy statement.
