US Stocks Mixed as Bond Yields Surge to Multi-Decade Highs

Wall Street experienced a mixed trading session on the final day of September, with major indices fluctuating after initial optimism faded. The Dow Jones Industrial Average dipped approximately 0.4%, while the S&P 500 added about 0.3% and the Nasdaq Composite gained 0.2%. This volatility came despite earlier positive inflation data for August, which had initially driven down government bond yields.

However, yields on U.S. government bonds saw a significant surge, with the 10-year Treasury yield reaching its highest level in over two decades, surpassing 5.304% and exceeding the intraday peak from 2007. The 30-year bond yield also remained at its highest point since 2002. This rise in yields occurred even as the core PCE inflation index showed a modest 0.2% increase in August, below expectations, and as Q2 GDP growth was revised upward to 2.2% from 1.5%.

Market participants are now pricing in less than a 40% probability of another Federal Reserve interest rate hike in October, a decrease from earlier expectations. The U.S. dollar held steady near its monthly high, and oil prices hovered around $100 per barrel. Stronger-than-expected private sector job growth in September, with ADP reporting 90,000 new jobs, also contributed to the economic picture, suggesting continued economic momentum.

In corporate news, Boeing secured a $20 billion U.S. Department of Defense contract to develop the next generation of fighter jets for the Navy. HPE's stock rose after winning a $1.2 billion order from cloud company Vultr to supply AMD server cabinets equipped with HPE networking gear. Conversely, Moderna shares declined after Citigroup downgraded the stock to "Sell," citing an unjustified valuation.

European markets closed lower, with Paris down 1%, Frankfurt off 0.7%, and London down 0.2%. In other news, toy manufacturer Mattel announced that CEO Ynon Kreiz will step down on October 2nd, to be replaced by board member Roger Lynch. Additionally, Israel's Zim Integrated Shipping Services is planning to resubmit its request for approval of changes to its special state share terms to the Government Companies Authority.