US stocks fall for third day as yields and oil climb

US stocks fell for a third consecutive day on Wednesday, as rising Treasury yields and a surge in oil prices dampened investor sentiment.

The Dow Jones Industrial Average declined 405.41 points, or 0.77%, to close at 52,380.66. The S&P 500 lost 0.48% to settle at 7,636.36, while the Nasdaq Composite dropped 0.64% to 26,253.34.

Treasury Buyback Pushes Yields Higher

The Treasury Department announced it would triple its repurchase of longer-dated bonds to $6 billion. However, the move did not prevent the 10-year yield from climbing to 4.84%, its highest level since November 2023.

Some market participants had anticipated a larger buyback. Peter Boockvar of The Boock Report commented that Wall Street estimates ranged up to $7 billion to $8 billion.

Thomas Martin of Globalt Investments highlighted an unusual divergence in sentiment.

“You look at equity sentiment, and it’s at an extreme. At the same time, the sentiment for higher interest rates is also at an extreme. Those two things shouldn’t be able to live together for very long.”

Martin, in comments to CNBC

Oil Rises Further on Iran Tensions

Brent crude settled 3.36% higher at $101.21 per barrel, its highest close since May. West Texas Intermediate (WTI) advanced 3.25% to $96.05.

Rising tensions between the US and Iran have sparked concerns about potential disruptions to Middle East energy supplies. The pressure adds to a bond market already strained by the standoff.

Earlier in September, similar anxieties sent Asian equity benchmarks lower. At that time, separate strikes had pushed oil to a multi-week high.

Martin stated that a move toward $120 a barrel would capture the market's full attention. Wednesday's rise did not reach that level.

The declines followed the Dow's steepest single-day drop in nearly three weeks on Tuesday. That session opened a shortened trading week after Monday's Labor Day holiday.