U.S. stocks face inflation and earnings test as yields, oil pressure sentiment

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Stocks face inflation, earnings test

Highlights

U.S. 2-year Treasury yield hit 4.434%, a high since July 2024, and 10-year yield reached 4.857%, its highest since November 2023.
Brent crude surged above $100 a barrel with several energy majors, including ConocoPhillips, Chevron, Phillips 66, and Valero, achieving record highs.
Consumer sector weakness persists as McDonald's trades 25% below its March 2 peak, and Nike falls to its lowest level since June 2014, down 51% from its October 2 high.

Thursday catalysts for trading

As reported by CNBC, traders are focused on a packed Thursday schedule that includes economic releases before the open and several high-profile executive appearances through the day. Weekly initial jobless claims and the producer price index are due at 8:30 a.m. ET, with the Dow Jones consensus pointing to 205,000 claims, monthly PPI growth of 0.4% and annual PPI of 5.3%.

CNBC also highlights scheduled interviews with Starbucks CEO Brian Niccol on “Squawk Box” in the 8 a.m. hour and Freeport-McMoRan CEO Kathleen Quirk on “Closing Bell: Overtime” at 4 p.m. Starbucks shares have gained 30% since Niccol took over, although the stock remains 9.5% below its Aug. 13 high, while Freeport-McMoRan is down 5% from its late-August peak.

Macy's is set to report in the morning, with its shares down 3% over three months, while Oracle reports in the afternoon after a 21% decline over the same period. HP has just reached a 52-week high, with HPQ shares up almost 8% so far in September.

Yields, oil and sector moves reshape market focus

The rate backdrop remains central to sentiment. The U.S. 2-year Treasury yield reaches 4.434%, its highest level since July 2024, while the 10-year yield touches 4.857%, the highest since November 2023. The 3-month Treasury bill yields 3.9%, and bond investors are also watching income levels across corporate and high-yield exchange-traded funds, including FCOR at 4.74%, JNK at 6.76%, HYG at 6% and SHYG at 7.05%.

Energy shares are also drawing attention after Brent crude tops $100 a barrel on Wednesday, with both Brent and West Texas Intermediate up more than 20% over the past month. ConocoPhillips trades at a four-year high, Chevron reaches an all-time high, Phillips 66 hits an all-time high dating back to its 2013 IPO, and Valero posts another record after rising almost 5% in two days and 8.4% so far in September.

Elsewhere, several consumer names remain under pressure. McDonald's is down 25% from its March 2 high and trades at levels last seen in July 2024, while Nike falls to its lowest point since June 2014, leaving the shares down 51% from their Oct. 2 high.

Our earlier coverage of the U.S. Treasury’s long-dated bond buyback plans explained how the announced purchase size fell short of some market expectations, pressuring bond prices and pushing yields higher. We also noted that a strong 10-year note auction helped temper the move, while oil’s jump above $100 and incoming inflation reports kept investors focused on the risk of tighter Fed policy.

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