By US stocks recovered from early losses and closed slighly higher on Thursday as Treasury yields pulled back from multi-decade highs, helping the major indexes close slightly higher.
The S&P 500 gained 0.23% to 7,668.82, while the Nasdaq Composite rose 0.07% to 26,871.60. The Dow Jones Industrial Average added 29.84 points, or 0.06%, to finish at 50,935.89.
The recovery came after the benchmark 10-year Treasury yield briefly climbed to 5.342%, its highest level since April 2002.
The 30-year Treasury yield also reached its highest level in 24 years.
Yields later reversed course as buyers returned to the bond market.
The 10-year and 30-year yields were lower by 6 and 4 basis points, respectively, while the two-year yield fell nearly 10 basis points.
The decline in shorter-dated yields reflected changing expectations around Federal Reserve policy.
The two-year Treasury yield, which is particularly sensitive to expectations for the federal funds rate, was on track for its largest daily decline since August 2025.
Economic data keeps inflation concerns in focus
Stocks had initially come under pressure as economic data pointed to a resilient labour market and continued price pressures.
Weekly initial jobless claims fell to 197,000, below the 200,000 forecast from economists surveyed by Reuters.
The data came ahead of the government’s monthly payrolls report due on Friday.
Meanwhile, the Institute for Supply Management’s manufacturing PMI edged down to 54.5 in September from 54.6 in August.
The report also showed an increase in input prices, adding to concerns about persistent inflation.
However, expectations for an October Fed rate hike weakened further.
Softer-than-expected US inflation data released on Wednesday had already reduced market expectations for another increase.
Markets were pricing a 28.2% probability of at least a 25-basis-point rate hike at the October meeting, down from 68.6% a week earlier, according to CME FedWatch data.
Fed Vice Chair Philip Jefferson indicated that the central bank could be patient before raising rates again after its 25-basis-point increase in September.
Minneapolis Fed President Neel Kashkari, however, said additional rate increases could be needed to restrain the economy into 2027, while remaining uncertain about whether the next move should come this month.
Oil gains as energy stocks outperform
Higher oil prices remained another factor for investors as markets assessed inflation risks and developments in the Middle East.
Brent crude settled more than $4 higher after China suspended fuel exports, raising concerns about tighter global fuel supplies.
WTI crude gained 1.6% to trade above $91 a barrel as investors awaited the next steps from the Trump administration in the Iran conflict.
The rise in crude prices helped the S&P 500 energy sector gain almost 2%, making it the strongest-performing sector among the 11 major S&P sectors.
Technology stocks also showed strength, with the sector gaining nearly 1%. Software shares advanced following Accenture’s results and outlook.
Micron Technology also remained in focus after reporting strong results and a better-than-expected revenue forecast.
The company also announced $32 billion in customer commitments under supply agreements, supporting continued investor interest in the AI trade.
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