Oil and Yields Drive Equity Losses for a Fourth Session

NeilSethi on September 10, 2026

I will leave this introduction in for this week: For readers who are new to my work, this piece, the evening update, is meant to be a look at the major forces which drove markets in the day’s trading and a look ahead to the following day (or week on Fridays). As with the other updates, I also want this piece, to evolve in whatever way is most meaningful for readers.

So please post or email comments, questions, pushback, or suggestions, and especially what you would like to see more or less of. I read all the feedback, and I promise to be responsive. If you do put a comment in though please be sure to put an @ and my name so it alerts me.

Quick Summary

Another leg higher in oil, on top of a firm inflation backdrop, lifted Treasury yields to multi-year highs, hardening Fed rate-hike bets into next week’s meeting, and driving a fourth straight day of equity losses.
Oil remained a key driver with global benchmark Brent spiking above $110 on the cash market and WTI similarly shooting (+7.5%), both to closing levels seen only once before since 2022 (in April).
On the data side, while August PPI landed in line at +0.4% m/m at the headline level, the annual rate came in a tenth above expectations at a very elevated 5.4% (up from 4.8% in July). More details in the Misc section.
The rise in oil prices paired with the elevated PPI year-over-year read pushed Fed rate hike bets higher now seeing a 71% chance of a hike at the September meeting and ~3.5 hikes through 2027. All of that, added to the momentum in the short bonds trade, saw 2-year yields rocket 15 basis points higher (the largest move in over a year) to the highest since July 2024. 10-year and 30-year yields also jumped to the highest closes since October 2023 and 2007 respectively.
With that backdrop indices opened lower and never made much headway, though losses stayed contained given the circumstances. The Russell 2000 again led to the downside at -1%, with the S&P 500, Nasdaq, and Dow all closing around -0.6%, all lower for a fourth straight day, for the SPX its longest losing streak since June (Bloomberg).
Breadth thin: only Communications and Consumer Staples closed green, neither up more than 0.3%, while three sectors fell around 1% or more, including heavyweight Tech.

Market Commentary

“Rising oil prices will be a concern ahead of the midterms,” said Warren Patterson, head of commodities strategy at ING Groep NV. “In order to see prices moving significantly higher, we would need to see recent escalation feeding through to renewed disruptions in oil flows through the Strait of Hormuz.”

“The PPI release itself was inconclusive, in that doesn’t really help to settle the question of ‘hike or no hike’ from the Fed next week, but WTI oil prices surging back above $100 and Treasury yields hitting new highs is certainly raising the stakes for investors ahead of tomorrow’s crucial CPI report,” wrote Stephen Coltman, head of macro at 21shares.

“Inflation is still a problem,” said Clark Bellin at Bellwether Wealth. “While interest-rate movements can’t bring high oil prices down, the Fed’s job is to respond to inflationary pressures.”

While a hike isn’t a “slam dunk” just yet, the Fed may be running out of road to accommodate another renewed supply shock without additional reassurance on underlying inflation, according to Krishna Guha at Evercore. His firm put its “no-Fed-hike call” under review and will update once the CPI report is released Friday.

“Inflation is a physical constraint and geopolitical problem, not a monetary problem,” said Brian Jacobsen at Annex Wealth Management. “If the Fed hikes next week, it should be a symbolic hike to assert its independence and build credibility and not in the hope that it will actually fix the inflation problem.”

“Underneath the surface, we are seeing signs that these rates are actually starting to bite already,” Keith Lerner, chief market strategist at Truist Wealth said. He pointed to the S&P Equal Weight, which is down 4% from its 52-week closing high, and the small-cap Russell 2000, which is off almost 5.5%. Consumer-facing companies in the equal weight are likely to be more impacted by higher oil prices, which could lead individuals to pull back spending. Meanwhile, small-cap stocks are typically more sensitive to borrowing costs. “The rate story, higher oil prices, and the potential of a Fed increase is just making the market more on edge,” he added.

Ameriprise Financial Chief Market Strategist Anthony Saglimbene told MarketWatch by phone that the Thursday decline appears “pretty orderly” in the face of a jump in Treasury yields. In his view, the artificial-intelligence trade has remained a positive force even as the market appears worried about the 10-year Treasury yield approaching 5%. While the S&P 500 has declined 2.1% over the past month, its largest sector, information technology, has shed a modest 0.4%, according to FactSet data, at last check. Oracle’s quarterly earnings report, expected after the closing bell, will be “a barometer” of the AI trade, said Saglimbene. [Oracle ($ORCL) shares are up 7% after their earnings report (see below)]

Stock and Sector Breakdown:

Despite the continued rise in oil prices, Energy didn’t manage a positive session, leaving Communications and Staples as the only two green sectors although neither was higher by more than 0.3%. In contrast every other sector was down by at least that much with three down around 1% or more including heavyweight Tech.

Semiconductor stocks became a source of weakness after providing relative strength during the first two sessions of the week. The PHLX Semiconductor Index ($SOX) dropped 2.7%, with NVIDIA ($NVDA) -2.36% among the notable mega-cap laggards. Taiwan Semiconductor Manufacturing ($TSM) also fell despite reporting a 53% year-over-year increase in August revenue. Skyworks ($SWKS) +9.79% and Qorvo ($QRVO) +6.77% though rallied amid increased investor optimism that their proposed merger will ultimately close.

Earnings-related weakness showed up in several other names. Cooper ($COO) -14.67% fell sharply after its Q3 revenue miss and downside Q4 guidance, while American Eagle ($AEO) -13.91% was another laggard following its quarterly results. Several other apparel stocks traded lower in sympathy.

On the other side of the ledger Reddit ($RDDT) +6.09% ranked among the better-performing S&P 500 components, while Comcast ($CMCSA) +2.36% and Charter Communications ($CHTR) +4.98% rebounded from Wednesday’s declines.

After the bell Oracle ($ORCL) was the standout, jumping 7% after reporting better than expected results and a raise to FY guidance highlighted by cloud revenue surging 62% and cloud-infrastructure revenue more than doubling (see post below).

Number of large SPX winners (up over 3%) down to just 7 from 12 Wednesday and ~30 Tuesday (very low numbers historically), but the number of large losers (down over 3%) has also remained relatively low given the index losses at ~40 from ~45 Wednesday, ~85 Tuesday.

I had mentioned the weak positive volume (intensity of buying in stocks up on the session) yesterday, and that was one place we saw improvement with both the NYSE and Nasdaq increasing to 33.1% and 39.9% respectively despite losing almost exactly the same amount as Wednesday.

But, the news elsewhere was not so great. New 52-week highs minus new lows on the NYSE fell to -307 outside of the liberation day crash that’s the least since 2023.

They fell to -356 on the Nasdaq, the least since April.

And both the Nasdaq and NYSE saw the percent of stocks above 20 and 50-DMAs continue to fall.

Nasdaq

NYSE

Some other after hour movers from CNBC:

Adobe ($ADBE) — The maker of Adobe Creative Cloud slid 2% after reporting current-quarter guidance that was roughly in line with estimates.
Copart ($CPRT) — The car auction company surged more than 8% after fourth-quarter revenue topped expectations. Copart also announced it would acquire ACV, a digital automotive marketplace, in a roughly $1.9 billion deal.
RH ($RH) — Shares of the home furnishings retailer jumped 6%. RH posted second-quarter revenue of $922 million, beating the LSEG consensus call for $915 million.

Some stock-specific commentary from TheStreet Pro today:

James “Rev Shark” DePorre – SpaceX Shines Amid Sagging Market, So I’m Snagging Some Shares
Stephen Guilfoyle – I’m Snapping Up More SoFi, Two More Stocks & AeroVironment at a Crossroads After Impressive Earnings
Chris Versace – Taiwan Semi’s August Revenue Surges: 8 Key Items Shaping the Pro Portfolio Today & Locking in Gains on a Construction Play as Rate Concerns Mount
Bob Lang – Chart of the Day: What Luck, Another Buying Opportunity in Cybersecurity!

Some other corporate news from BBG (story links to BBG stories, ticker links to TheStreet Pro):

Cybersecurity is the next big market for artificial intelligence, with advances in the technology set to disrupt an industry geared to defending computer systems, said Nvidia Corp. ($NVDA) Chief Executive Officer Jensen Huang.
Anthropic PBC accused China’s AI champion Moonshot AI of covertly routing thousands of user requests to the US firm’s Claude models and passing off the responses as its own in a bid to gain an edge in the AI race.
Macy’s Inc.’s ($M) guidance left investors unimpressed, overshadowing a strong quarterly performance and increase in outlook.

A Look At The Charts

Note on all charts the colored lines are moving averages (the average price over the lookback period (days on the daily charts, weeks on the weekly charts)):
20 = green
50 = purple
100 = blue
200 = brown

Exception is monthly charts where blue is 10-month moving average and brown is 20-month moving average.

MACD = Moving average convergence/divergence line, a measure of momentum that compares longer term and shorter term momentum to gauge if a move is strengthening or weakening. This is probably my favorite individual indicator (it’s also the favorite of Katie Stockton, a very fine technician).

RSI = Relative Strength Index (basically what it sounds like) = measures the strength of the move comparing gains to losses over the given lookback window (I use the standard 14 periods).

SPX fell under the 50-DMA, not great but not fatal, but also not a place we want to spend that much time at, although you can see that we spent as long as six sessions under as recently as July then popping right back over.

Daily MACD remains in “sell longs” positioning, and RSI is under 50. I said Tuesday/Wednesday “just caution flags – nothing yet to turn bearish, but that probably changes short term if the 50-DMA doesn’t hold.” For now I’m taking some comfort in the fact it doesn’t seem CTA selling thresholds have hit, and Tier1Alpha (see below) finds the 7575 level (which we closed above) good support. If we breach that I will exit my SPX index longs until we recover the 50-DMA.

Nasdaq Composite continues to be in better shape closing right on its 50-DMA. Daily MACD starting to slip more bearish though and RSI now under 50. Holding here as well for now.

The Russell 2000 (RUT) I said Wednesday was “much more problematic,” and that continued Thursday continuing its steeper decline. As mentioned Tuesday its MACD is now in “go short” positioning, and its RSI is now below 40. As I said Wednesday “I am not long this index, but any further weakness and I’d be out until it at least recovered the 100-DMA.”

The equal-weighted SPX I said Tuesday “had been perhaps the strongest chart since the March bottom but is now the most concerning.” So as I said Wednesday “another down day isn’t a shock, and it really has no good support anywhere close. It has the most severe MACD separation, and the RSI is the weakest since late March. I mentioned Tuesday ‘I did take off most of my holdings in ($RSP) for now.’ I’ll be looking for a tradeable bottom to form.” Perhaps the 100-DMA can offer some support.

Treasury yields jumped across the curve Thursday once again, but this time in a “bear flattening” (meaning shorter maturity yields rose more than longer maturities (bearish because it implies Fed rate hikes)):

The two-year Treasury yield soared 15 basis points to 4.59%, the largest move in over a year to the highest close since July 2024.

It is ~96 basis points above the Effective Fed Funds rate (red line), screaming for rate hikes. That’s the furthest above the EFFR since November 2022 when the Fed was in the middle of a historic tightening campaign.

And probably no surprise that FOMC rate hike expectations also shot higher. While the September meeting rose to a 71% chance from 60% on Wednesday, the bigger change was down the line. Pricing for December rose by 10 basis points with now a 67% chance of two hikes and through 2027 there’s now over three hikes priced (86 basis points). Really feels like we’re pushing to one side of the boat on a lot of fronts now.

10-year yields no wallflower though up 12 basis points to 4.96%, the highest since October 2023, and closing in on 5% which was a level we briefly saw before Janet Yellen took pressure off with the November refunding announcement. The SPX fell around 6% between October 17th and the end of the month during that episode.

And the FT with a story on Stanley Druckenmiller, who famously criticized Scott Bessent’s buyback program, saying today that US borrowing costs remained a “little low” and central bankers who thought monetary policy was restrictive were “ridiculous”.

“Given what’s going on in the economy and the capital spending boom and the war for capital, if anything, [bond yields seem] a little low,” Druckenmiller said. “It’s just been like a slow, fundamentally driven march upward in yields. But I don’t find it alarming at all.”

More on 10-year yields and the Treasury buybacks from TheStreet Pro:

Chris Versace – Treasury’s Big Move Leaves the Market Unimpressed
James “Rev Shark” DePorre – Buyback of Bonds Backfires

30-year yields were up seven basis points to 5.37%, levels briefly seen in 2007 but really more associated with pre-2003. And that was despite one of the strongest 30-year Treasury auctions on record (see post).

VIX rose for a fifth session to 17.8, the highest since July. The indicator is now above the middle of its “normal” range post-GFC, consistent with ~1.11% average daily moves in the SPX over the next 30 days.

The VVIX (VIX of the VIX) also rose to the highest close since July at 102.7, after touching the lows of the year on Friday.

The current level is consistent with “elevated” daily moves in the VIX over the next 30 days (historically, normal is 80-100). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

And the 1-day VIX jumped to 17.5, the highest since the day before the July FOMC. The current reading isconsistent with a move of 1.09% in the SPX next session.

WTI (cash) up another 7.5%, the biggest jump since April, to $104.30. That’s a level that we’ve only seen once since 2022 on April 29th. While it’s a fundamentally driven market, the technicals are quite strong.

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro), rebounded but ran into heavy resistance at the 200-DMA.

The daily MACD remains tilted positive but the RSI is under 50. If it can get through the 200-DMA it likely runs to the 100 (blue line).

Gold futures (/GC) fell back to the 100-DMA. The daily MACD remains negative while the RSI is under 50. As mentioned Tuesday, “I will wait for it to get back over the 200-DMA to add back what I took off when it fell below.”

US copper futures (/HG) ran into tariff man, dropping 5% after the White House indicated it was still weighing copper tariffs. It did though hold the 50-DMA and the uptrend from March (in addition to the longer term uptrend running to February 2020). Technicals though quickly softened to neutral.

US natural gas futures (/NG) now back to trading in their range since the start of July.

Bitcoin futures down for a fourth session and juuust holding the bull flag formation I mentioned Tuesday. Daily technicals are turning more negative though. As I said Tuesday “I’ll stay long as long as it holds above the bottom of the flag (and will add if breaks above).”

Miscellaneous:

Wrap-up – The lull is close to turning into something more

As I said Wednesday:

While Ed Yardeni might say that the bond vigilantes (the term he coined) are not back, the market action today seems to indicate otherwise. Since August 25th there’s only been one day that the 10-year yield closed lower, so it seems very much that the market is testing both Treasury Secretary Bessent as well as Fed Chair Warsh. It might not even matter what the CPI prints Friday. As I mentioned in the Week Ahead, markets seem to want their “pound of flesh” and a rate hike might be the only way out unless Bessent is willing to do a lot more than he did today.

Until we see rates cool off (and oil would be a nice complement), it’s clear the non-Tech trade will struggle, and even within Tech things have gotten very bifurcated.

And that push higher in yields only accelerated today. I have been “reminding myself” the past few days of all of the positives I went over in the Week Ahead, but noted yesterday

We haven’t gone far enough for any of that to have changed, but we’re edging closer in many respects — gamma is thinning, CTA sell triggers are closer, key technical levels are drawing closer (or have been broken), rates are drawing closer to levels where we’ve seen market pullbacks in the past, etc. And I’ve found myself doing more selling than buying this week as positions hit stop out levels (like with the SPX equal-weight index mentioned earlier). As I said “this is not a time to be complacent”.

And that also only increased Thursday. We’re getting closer and closer to a place where the current 2.7% pullback morphs into something bigger. A lot though depends on CPI. Both fingers crossed for a cool print.

Friday is all about CPI

Friday brings us our main event of the week in the August CPI report. We’ll also get the preliminary September consumer sentiment report from UMich.

No Fed speakers with the blackout in effect.

Non-Bill (>1yr in maturity) US Treasury auctions are done for the week.

In terms of corporate events, just one SPX component reporting in Kroger ($KR).

Ex-US highlights are UK GDP, Japan PPI, and the IEA’s monthly report.

It’s also the 25th anniversary of the Sept. 11, 2001, attacks, with commemorative ceremonies in New York, at the Pentagon, and at the Flight 93 National Memorial in Pennsylvania.

From Christophe Barraud’s Week Ahead:

Category: Market Commentary, Uncategorized
Tag: ADBE, AEO, CHTR, CMCSA, COO, CPRT, Economic Analysis, Economic Data, Features and Commentary, Indexes, KR, M, Market Commentary, NVDA, ORCL, QRVO, RDDT, RH, RSP, SOX, SWKS, TSM