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U.S. stocks slipped Tuesday as another leg higher in crude oil drove the 10-year Treasury yield above 4.8% for the first time since October 2023, reviving speculation that the Federal Reserve could raise rates next week.
The Dow Jones Industrial Average bore the brunt of the damage, falling 578 points.
West Texas Intermediate crude hovered near $92 a barrel, up roughly 12% over the past month, while Brent held above $97 and is up about 11% on the month. U.S. Strategic Petroleum Reserve stocks fell by about 1.2 million barrels last week to 285.4 million barrels, the lowest since 1982.
The 10-year Treasury yield topped 4.8% before easing to about 4.78%, its highest level in nearly three years. The 2-year yield rose two basis points to 4.40%, while the 30-year held at 5.25%.
Traders now assign roughly a 58% probability to a 25-basis-point rate hike at next week's Federal Open Market Committee meeting, a remarkable repricing for an economy that added 162,000 jobs in August.
Producer prices land on Thursday and the consumer price index follows on Friday, with headline CPI seen holding at 3.4% and core easing to 2.4%.
The S&P 500 fell 0.4% to 7,689.63, while the Dow Jones Industrial Average dropped 1.1% to 52,836.34, a decline of 578 points. Amgen Inc. (AMGN) was the single largest drag, sinking 9.6%.
The Nasdaq 100 slipped 0.4% to 29,418.83, though the internals were far better than the headline.
Within Magnificent Seven stocks, Tesla Inc. (TSLA) rose 3.8%, NVIDIA Corp. (NVDA) added 2% and Apple Inc. (AAPL) gained 1.4% ahead of Wednesday's iPhone event.
Gold gave back 0.5% to about $4,384 an ounce, leaving the metal essentially flat for September and short of any new milestone.
Volatility perked up, with the CBOE Volatility Index climbing 5.2% to 15.29.
According to market data:
The Utilities Select Sector SPDR Fund (XLU) led all sectors with a 1.2% gain, followed by the Energy Select Sector SPDR Fund (XLE), up 1% as crude held near multi-month highs.
The Technology Select Sector SPDR Fund (XLK) added 0.5% and the Real Estate Select Sector SPDR Fund (XLRE) rose 0.4%.
At the other end, the Health Care Select Sector SPDR Fund (XLV) cratered 2.2%, by far the worst performer. The Financial Select Sector SPDR Fund (XLF) shed 0.9%.
Beneath the sector level, the split was violent. The Invesco WilderHill Clean Energy ETF (PBW) jumped 2.6% and the Invesco Solar ETF (TAN) rose 2.6%, while the SPDR S&P Metals & Mining ETF (XME) climbed 1.9% on a 2.1% copper rally and the VanEck Semiconductor ETF (SMH) advanced 1.7%.
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) added 1.6%.
Rate-sensitive consumer and software groups took the pain.
The SPDR S&P Retail ETF (XRT) and the iShares U.S. Home Construction ETF (ITB) each dropped 2.2%, the iShares Expanded Tech-Software Sector ETF (IGV) fell 2.1% and the iShares Biotechnology ETF (IBB) slid 1.8%.
Amgen was the story of the session.
Shares plunged 9.6% to $395.15 after Novartis AG (NVS) disclosed that pelacarsen, its investigational lipoprotein(a)-lowering therapy, failed to reduce cardiovascular death, heart attack or stroke versus placebo in a pivotal Phase 3 trial despite cutting Lp(a) levels.
The read-across hit Amgen's rival candidate olpasiran, and BMO Capital downgraded the stock. The fallout spread across medtech, with Stryker Corp. (SYK) down 7.2%.
Roivant Sciences Ltd. (ROIV) was the biggest gainer in the Russell 1000, soaring 19.7% after mosliciguat, the lead asset at subsidiary Pulmovant, succeeded in a mid-stage trial in patients with pulmonary hypertension associated with interstitial lung disease.
The company also expects to launch brepocitinib for dermatomyositis by the end of September after the FDA accepted the application under Priority Review.
The power-and-compute trade did the heavy lifting elsewhere.
Bloom Energy Corp. (BE) rallied 10.9% to $280.58 on confirmation it will join the S&P 500 before the open on Sept. 21, with UBS lifting its price target to $325 from $300 and estimating passive funds could ultimately hold 10% to 15% of shares outstanding.
Intel Corp. (INTC) gained 9.5% to $104.91 following a media report that the chipmaker is planning another round of price increases to lift gross margin, an accompanying analyst upgrade, and confirmation that it has processed more than one million wafers using High-NA EUV lithography on its 18A process.
CoreWeave Inc. (CRWV) surged 14.6% to $102.38 and Fermi Inc. (FRMI) climbed 12.6% to $5.76. Both moves look like positioning in the AI infrastructure and neocloud complex ahead of Oracle Corp. (ORCL) fiscal first-quarter results Thursday.
Oracle itself rose about 5% ahead of the print.
Lumentum Holdings Inc. (LITE) advanced 11.4% to $981.94, extending a run that began with a late-August fiscal fourth-quarter beat-and-raise in which adjusted earnings and revenue roughly doubled year over year and prompted a wave of price-target hikes, including Mizuho's move to $1,140.
Enterprise software kept bleeding.
Guidewire Software Inc. (GWRE) fell another 8.5% to $148.63, extending a roughly 20% post-earnings slide from Sept. 4 after fiscal 2027 guidance implied annual recurring revenue growth decelerating to about 18% from 19% and first-quarter revenue guidance of roughly $375 million landed about 3% below the $387.6 million consensus.
UiPath Inc. (PATH) lost 7.2% to $14.10, also extending losses tied to what analysts characterized as a low-quality beat paired with slowing growth.
GoDaddy Inc. (GDDY) dropped 7.3% to $93.97 after a securities class action notice was issued Tuesday over the February disclosure that bookings growth decelerated to 5%, compounding a recent Wells Fargo downgrade to Underweight with a $76 price target.
Shift4 Payments Inc. (FOUR) slid 9% to $41.78 on no confirmed company-specific news, moving with a broad de-rating across payments and fintech that also caught peers WEX, Remitly and Paymentus.
On the tape late morning, QUALCOMM Inc. (QCOM) chief financial officer said the company has landed another hyperscaler engagement, expects to begin recognizing Amazon revenue in the December quarter and holds high confidence in its $5 billion data center target.
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