The major averages extended their losing streak to three sessions on Thursday as another surge in crude oil, rising Treasury yields, and heightened expectations for a rate hike continued to weigh on equities. The S&P 500 (-0.6%), Nasdaq Composite (-0.7%), and DJIA (-0.6%) finished with similar losses, while the Russell 2000 (-1.0%) and S&P Mid Cap 400 (-0.9%) underperformed.

Oil prices remained at the center of the market's concerns and continued climbing throughout the afternoon as an off-ramp to the U.S.-Iran conflict remained elusive. WTI crude settled $6.32 higher (+6.6%) at $102.30 per barrel, bringing its gain for the holiday-abbreviated week to roughly 11.5%. The latest advance compounded the oil-driven pressure that has weighed on equities throughout the week. Treasury yields presented another obstacle, with the 10-year note yield climbing 11 basis points to 4.94%.

Expectations for tighter monetary policy also increased following this morning's August Producer Price Index. Headline PPI rose 0.4% month-over-month, matching the Briefing.com consensus, while core PPI increased a slightly cooler-than-expected 0.2% (Briefing.com consensus: 0.3%). However, upward revisions to the July readings and an acceleration in year-over-year producer inflation reinforced expectations for a possible rate hike at next week's FOMC meeting. The CME FedWatch Tool assigned a 73.1% probability to a rate hike following the report, up from 61.2% yesterday.

The pressure remained widespread through the close, with nine of the 11 S&P 500 sectors finishing lower. The materials sector (-1.5%) ended at the bottom of the standings amid declining precious metal prices with particular weakness in copper.

Meanwhile weakness in the information technology sector (-0.9%) had an outsized influence on the major averages. Semiconductor stocks were a particular source of weakness after providing relative support during the first two sessions of the week. The PHLX Semiconductor Index dropped 2.7%, with NVIDIA (NVDA 218.40, -5.27, -2.36%) among the notable mega-cap laggards. Taiwan Semiconductor Manufacturing (TSM 428.31, -7.05, -1.62%) also declined despite reporting a 53.3% year-over-year increase in August revenue to NT$514.81 billion, as the stock gave back some ground following its strong recent run.

Skyworks (SWKS 84.03, +7.49, +9.79%) and Qorvo (QRVO 112.36, +7.12, +6.77%) bucked the broader semiconductor weakness, however, as shares rallied amid increased investor optimism that their proposed merger will ultimately close.

Earnings-related selling added to the weakness in several individual names. Cooper (COO 54.17, -9.31, -14.67%) fell sharply after its Q3 revenue miss and downside Q4 guidance highlighted a steeper near-term slowdown at CooperVision. American Eagle (AEO 14.54, -2.35, -13.91%) was another pronounced laggard following its quarterly results, as continued softness at the American Eagle brand and a modest reduction to back-half operating income expectations overshadowed strength at Aerie. Several other apparel stocks traded lower in sympathy.

There were some pockets of strength outside the technology sector. Reddit (RDDT 155.36, +8.92, +6.09%) ranked among the better-performing S&P 500 components, while Comcast (CMCSA 25.17, +0.58, +2.36%) and CHTR rebounded from Wednesday's declines. Both stocks had come under pressure in the prior session after Comcast highlighted heightened "competitive intensity" during comments at the Goldman Sachs Communacopia + Technology Conference. The communication services sector finished 0.3% higher, while the consumer staples sector (+0.2%) also finished modestly higher.

Attention now turns to a pair of potentially significant catalysts. Oracle (ORCL 153.17, -8.46, -5.23%) reports earnings after today's close and faces elevated expectations surrounding its rapidly expanding AI infrastructure business and massive data center buildout. Investors will be looking for continued cloud acceleration as new capacity comes online, along with evidence that the company's heavy infrastructure investment is progressing as planned.

Tomorrow morning's August CPI report (Briefing.com consensus: 0.4%) carries even broader implications. The report is widely viewed as a key deciding factor in whether the Fed raises rates or remains on hold at next week's FOMC meeting, putting inflation and the policy outlook squarely in focus following three consecutive losing sessions for the stock market.

Selling in U.S. Treasuries on Thursday produced yet another round of fresh 2026 highs in yields on notes and bonds of all tenors.  Today's strong 30-year bond reopening briefly returned the 30-year yield to its opening level before late pressure lifted that yield to within five basis points of its high from 2007 (5.408%). The 2-year note yield settled up 12 basis points to 4.55%, and the 10-year note yield settled up 11 basis point to 4.94%.

• Russell 2000: +16.5% YTD
• Nasdaq Composite: +12.2% YTD
• S&P Mid Cap 400: +11.5% YTD
• S&P 500: +10.9% YTD
• DJIA: +8.3% YTD

Reviewing today's data: 

• August PPI 0.4% (Briefing.com consensus 0.4%); Prior was revised to 0.1% from 0.0%, August Core PPI 0.2% (Briefing.com consensus 0.3%); Prior was revised to 0.3% from 0.2%
  • The key takeaway from the report is that while the slightly cooler-than-expected core PPI was a positive sight, it was essentially masked by the upward revisions to readings for July, so this report reinforces the market's expectations for a rate hike as early as next week.
• Weekly Initial Claims 206K (Briefing.com consensus 208K); Prior was revised to 207K from 206K, Weekly Continuing Claims 1.774 mln; Prior was revised to 1.775 mln from 1.779 mln
  • The key takeaway from the report is that initial claims remain locked in a narrow range right on their four-week moving average, signaling little overall change in layoff activity.
• August Existing Home Sales 3.98 mln (Briefing.com consensus 4.03 mln); Prior 4.06 mln
  • The key takeaway from the report is that home sales remain pressured by high mortgage rates and limited inventory, especially at the lower end. Sales of homes priced at $500,000 and below have faced the most pressure while sales of homes priced over $1 million have were up 3.9% year-over-year in August.
• July Wholesale Inventories 1.3% (Briefing.com consensus 1.3%); Prior was revised to 0.4% from 0.2%