Technology stocks led a broad market advance on Thursday as a decline in Treasury yields provided a tailwind, helping equities shrug off a surge in crude oil prices to their highest levels in months. The Nasdaq Composite climbed 1.4% by midday, while the S&P 500 gained 1.03% and the Dow Jones Industrial Average rose 1.13%.
The yield on the benchmark 10-year Treasury note fell about five basis points to 4.75%, down from Wednesday's close of 4.796%. This drop in borrowing costs provided a boost to long-duration growth stocks, which are particularly sensitive to interest rate expectations. Federal Reserve Governor Christopher Waller's remarks indicating a patient approach to monetary policy helped fuel the bond rally.
Waller said he would "support holding the policy rate" if inflation continues to improve, signaling that the central bank may be in no hurry to tighten further. However, the relief in yields was tempered by stronger-than-expected services sector data. The services PMI for August rose to 55.4 from 54.1, with the prices index climbing to 72.6, suggesting persistent inflationary pressures in the economy.
Despite the positive tone in equities, gains were broad but not uniform. The Russell 2000 index of small-cap stocks rose just 0.43%, indicating that the rally continued to favor larger companies. Among sector funds, nine out of 11 posted gains, with consumer discretionary and financials leading the way. Energy was flat despite higher oil prices, while materials declined.
Crude oil remained a key concern, with WTI futures rising 0.44% to $91.54 a barrel, extending a weekly gain of roughly 11% amid escalating tensions with Iran. The spike in oil prices has heightened inflation worries, which could pressure the Fed to maintain a tighter policy stance. However, for now, the drop in yields has been enough to offset these concerns.
Major technology stocks were the primary drivers of the index's strength. Microsoft (MSFT) advanced 2.87%, Meta Platforms (META) climbed 3.57%, and Apple (AAPL) rose 1.23%. NVIDIA (NVDA) gained 1.40% following its agreement to acquire Hugging Face for $12.93 billion, adding a growth catalyst to the rate-sensitive sector.
Individual stock moves were also notable. Snowflake (SNOW) surged 21.60% after strong earnings, while Broadcom (AVGO) slipped 2.96% despite a 86% jump in quarterly revenue. Hewlett Packard Enterprise (HPE) fell 3.97%, and Tyson Foods (TSN) dropped 6.99% after cutting its annual forecast.
Market breadth was supported by steady ETF turnover, with the SPDR S&P 500 ETF (SPY) seeing 20.4 million shares traded, compared to 17.6 million for the Invesco QQQ Trust (QQQ). The Cboe Volatility Index (VIX) fell 4.01% to 14.59, indicating a calm market sentiment.
Investors now look ahead to the August jobs report, due Friday, which is expected to show 65,000 new jobs and an unemployment rate of 4.2%. A stronger-than-expected report could reignite rate hike fears, while a weak number might fuel recession concerns. Additionally, any renewed surge in oil prices or a selloff in Treasuries could quickly erase the recent valuation relief.
