Dow edges higher as US stocks recover after Treasury yields hit 24-year high

• The 10-year Treasury yield reached 5.342% (highest since April 2002) before declining 6 basis points; the two-year yield fell nearly 10 basis points in its largest daily drop since August 2025
• Energy was the top-performing S&P sector with nearly 2% gains as Brent crude jumped over $4 and WTI rose 1.6% to above $91 per barrel on China's fuel export suspension and Iran tensions
• Jobless claims came in at 210,000 (vs 200,000 forecast) while ISM manufacturing PMI showed rising input prices; Fed Vice Chair Jefferson indicated patience on rate hikes despite continued inflation concerns

Market Summary: US Stocks Edge Higher as Treasury Yields Retreat from Multi-Decade Highs

Key Market Performance (October 1, 2026):

US equities recovered from early losses, closing modestly higher as Treasury yields pulled back from 24-year peaks. The S&P 500 gained 0.23% to 7,668.82, the Nasdaq Composite rose 0.07% to 26,871.60, and the Dow Jones added 0.06% (29.84 points) to 50,935.89.

Treasury Market Dynamics:

The 10-year Treasury yield briefly hit 5.342%—the highest since April 2002—before retreating 6 basis points. The 30-year yield also reached 24-year highs before declining 4 basis points. The two-year yield fell nearly 10 basis points, marking its largest daily decline since August 2025, reflecting shifting Federal Reserve expectations.

Federal Reserve Outlook:

Market pricing for an October rate hike dropped significantly to 28.2% probability, down from 68.6% a week earlier, following softer inflation data. Fed Vice Chair Philip Jefferson signaled patience on further rate increases after September's 25-basis-point hike, though Minneapolis Fed President Neel Kashkari suggested additional hikes may be needed into 2027.

Economic Data:

Weekly jobless claims totaled 193,000 (below the 200,000 forecast). The ISM manufacturing PMI edged down to 54.5 from 54.6, though input prices rose, maintaining inflation concerns.

Commodities and Sector Performance:

Oil prices surged after China suspended fuel exports. Brent crude jumped over $4, while WTI rose 1.6% above $91/barrel. Energy stocks led the S&P 500, gaining nearly 2%. Technology stocks advanced almost 1%, supported by strong results from Accenture, which reported $32 billion in new customer commitments and raised its outlook.

Market Implications:

Easing rate hike expectations and energy sector strength offset inflation concerns, providing modest support for equities amid heightened volatility.