Stocks Slip as Oil and Yields Rise; Fed Official Flags Possible Hikes
U.S. equities opened lower on Thursday as oil prices advanced and Treasury yields climbed, with technology shares under pressure. Philadelphia Fed President Anna Paulson said additional rate increases may be needed to bring inflation back to target. Losses were trimmed by gains in healthcare, energy, and communications stocks.
The Dow Jones Industrial Average fell roughly 122 points, while the Nasdaq dropped about 161 points, with technology shares leading the decline after Bloomberg reported Oracle issued a force majeure notice to the developer of its New Mexico data center. Healthcare, energy, and communications stocks helped trim losses. Philadelphia Fed President Anna Paulson, a voting FOMC member, said modest further tightening may be warranted to return inflation to the 2% target.
Economic data showed weekly jobless claims at 197,000, below the 201,000 consensus, while new home sales jumped 6.4% to a 684,000 annualized pace in August, the highest since the start of the year. Treasury yields hovered near two-decade highs, the euro slipped to a two-month low, and oil prices advanced amid stalled US-Iran diplomatic talks.
Rising oil prices and elevated Treasury yields could squeeze household budgets through higher fuel costs and borrowing rates, particularly for mortgages and consumer credit. The Fed official's suggestion of further hikes may signal prolonged monetary tightness, potentially slowing hiring and wage growth. Investors, retirees, and homebuyers could face continued market volatility, while businesses in rate-sensitive sectors like technology may see reduced valuations.