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Update: US Equity Indexes Retreat as Blockbuster Private Sector Growth Lifts Treasury Yields, Fed Rate-Increase Bets

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(Updates with index/price moves and company/geopolitical news from the first paragraph.)

US equity indexes fell after a surge in private-sector growth to the highest in more than five years lifted bets for a back-to-back interest rate increase in October and sent government bond yields sharply higher.

The Nasdaq Composite dropped 1.1% to 26,936.04 on Wednesday, retreating from an all-time high. The Dow Jones Industrial Average fell 0.7% to 51,511.59, and the S&P 500 slid 0.7% to 7,706.03. All sectors except energy declined. Communication services, utilities, and consumer discretionary led decliners.

US Treasury yields jumped after US private-sector output growth accelerated to a 62-month high in September amid strength in both services and manufacturing, while price pressures intensified. The 10-year yield soared 14.1 basis points to 5.11%, and the two-year rate surged 12.4 basis points to 4.9%.

S&P Global's (SPGI) flash purchasing managers' index data released Wednesday showed September's composite output gauge increased to 58.4 from 56 in August, marking a fourth straight monthly rise. The consensus was for 55.3 in a survey compiled by Bloomberg.

"To put the growth surge in context, barring the spike in demand following the opening up of the economy after the COVID-19 lockdowns, the latest improvement in business activity is the greatest recorded since early 2015," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

Mortgage applications in the US fell last week as a key 30-year rate crossed 7% to reach the highest level in over two years, potentially worsening ongoing affordability challenges. The Mortgage Bankers Association's market composite index, which measures loan application volume, decreased 1.5% sequentially in the week through Sept. 18, the association said.

Traders are now pricing a 69% probability that the Federal Reserve will raise its target rate range for federal funds by 25 basis points to 4% to 4.25% in October, up from 55% a day earlier and 9% a month ago, according to the CME FedWatch tool. The Fed raised rates by the same magnitude last week.

Iran's President Masoud Pezeshkian told the United Nations that Tehran will not surrender to the pressures being brought on by the US, while saying he is of the view that diplomacy is the way to end the war, Reuters reported Wednesday. This comes as US President Donald Trump warned on Tuesday that he could annihilate Iran if there is no deal to end the war, but also suggested an agreement could come soon, the news report said.

US Secretary of State Marco Rubio said that US-Iran mediated talks on the sidelines of the United Nations General Assembly failed to achieve any significant breakthrough, CNN reported Wednesday.

The front-month US West Texas Intermediate crude oil contract jumped 2.6% to $92.83 per barrel, and the global benchmark North Sea Brent shot up 4.4% to $103.66 per barrel amid worsening Iran geopolitics.

Palo Alto Networks (PANW) shares jumped 5%, the top gainer on the S&P 500 and the Nasdaq, a day after the company launched Unit 42 Continuous Frontier AI Defense, an agentic offensive security service, integrating Anthropic's Claude Mythos 5, OpenAI's GPT-5.6-Cyber, and open-weight models.

Paychex (PAYX) shares slumped 8.8%, the steepest drop on the S&P 500 and the Nasdaq, after the company reported fiscal Q1 revenue growth in line with market expectations, while management reiterated its full-year outlook amid a tough comparison in the current quarter.

McDonald's (MCD) said Wednesday it will provide $8.5 billion in support to franchisees through 2036 to accelerate restaurant modernization, technology deployment, and operational improvements. Shares dropped 4.8%, the Dow's worst performer.

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Asia Markets

Update: US Equity Indexes Close Mixed While Treasury Yields Retreat With Crude Oil

(Updates with index/price moves and comments from the first paragraph.)US equity indexes ended mixed Tuesday, with materials emerging as top gainers while financials fronted the decliners.The Nasdaq Composite rose 0.5% to 27,244.28, after hitting an intraday record earlier in the session. The Dow Jones Industrial Average fell 0.4% to 51,863.69 while the S&P 500 was unchanged at 7,764.64.Energy and communication services were among the decliners, while the consumer staples sector was one of the biggest outperformers.On Monday, more US stocks in the S&P 500 index scored new 52-week lows during the session than notched 52-week highs, CNBC reported. The last time that occurred for the S&P 500 was in December 1999, the year before the dot.com bust, the news report said.US President Donald Trump told the UN General Assembly that a deal with Iran is possible after the midterm elections, but his other choice is to "annihilate the Islamic Republic," CNN reported.The key actors in the US-Iran war will be having meetings in New York, starting Tuesday, Thierry Wizman, global foreign-exchange and rates strategist at Macquarie, said in a note. "And the agreements and accords that come out of those meetings may determine whether the war continues and intensifies or whether an off-ramp is found.The front-month US West Texas Intermediate crude oil contract dropped 1.2% to $94.59 per barrel, while the global benchmark North Sea Brent slumped 1.6% to $98.69 per barrel.The Federal Reserve's next interest rate increase could come as early as October as higher oil prices threaten to push inflation farther away from the US central bank's 2% goal, Oxford Economics said in a report e-mailed Tuesday. The research outfit has raised its projections for oil prices, factoring in risks to oil shipments via the Red Sea at a time when the Strait of Hormuz remains effectively closed.The US Treasury's 2-year auction hit a high yield of 4.787% on Tuesday, up from the 4.204% high in the previous auction. The bid-to-cover ratio for the auction was 2.63, above the 2.60 ratio in the previous auction.Most US Treasury yields slipped, with the 10-year yield leaning lower to 4.96% and the two-year rate down by less than one basis point to 4.75%.Gold futures rose 0.3% to $4,397.5, and silver futures jumped 1.8% to $67.63, turning the corner from earlier in the day.In economic news, Redbook US same-store sales rose by 7.6% from a year earlier in the week ended Sept. 19 after an 8.5% year-over-year increase in the previous week.In company news, Amgen's (AMGN) phase 3 study of dazodalibep met its primary endpoint, showing statistically significant and clinically meaningful improvement in systemic disease activity at week 48 in adults with Sjogren's disease, the drugmaker said. Shares jumped 4.3%, the Dow's top gainer.

Dow JonesNasdaq CompositeS&P 500$AMGN
Asia Markets

Update: US Equity Indexes Mixed in Midday Trading

(Updates with index/price moves, macroeconomic data, and comments from the first paragraph.)US equity indexes were mixed, with materials emerging as top gainers while financials fronted decliners, in midday trading on Tuesday.The Nasdaq Composite edged up 0.3% to 27,211.5, after hitting an intraday record earlier in the session. The Dow Jones Industrial Average fell 0.4% to 51,821.2 while the S&P 500 was unchanged at 7,763.9. Financials and communication services led decliners.US President Donald Trump told the UN General Assembly that a deal with Iran is possible after the midterm elections, but his other choice is to "annihilate the Islamic Republic," CNN reported.The front-month US West Texas Intermediate crude oil contract climbed 0.5% to $96.30 per barrel, while the global benchmark North Sea Brent declined 0.3% to $100.05 per barrel.The Federal Reserve's next interest rate increase could come as early as October as higher oil prices threaten to push inflation farther away from the US central bank's 2% goal, Oxford Economics said in a report e-mailed Tuesday. The research outfit has raised its projections for oil prices, factoring in risks to oil shipments via the Red Sea at a time when the Strait of Hormuz remains effectively closed.The US Treasury's 2-year auction hit a high yield of 4.787% on Tuesday, up from the 4.204% high in the previous auction.The bid-to-cover ratio for the auction was 2.63, above the 2.60 ratio in the previous auction.Most US Treasury yields declined after midday, with the 10-year yield unchanged at 4.96% and the two-year rate less than one basis point to 4.75%.In economic news, Redbook US same-store sales rose by 7.6% from a year earlier in the week ended Sept. 19 after an 8.5% year-over-year increase in the previous week.The Richmond Fed's monthly manufacturing index fell to minus 2 in September from 4 in August, compared with the expectations for 2 in a survey compiled by Bloomberg.The Philadelphia Federal Reserve Bank's monthly non-manufacturing activity index worsened to minus 22.0 in September from minus 10.6 in the previous month, compared with the expectations for an improvement to minus 8.7 in a survey compiled by Bloomberg.In company news, Amgen's (AMGN) phase 3 study of dazodalibep met its primary endpoint, showing statistically significant and clinically meaningful improvement in systemic disease activity at week 48 in adults with Sjogren's disease, the drugmaker said. Shares jumped 3.9%, the Dow's top gainer.

Dow JonesNasdaq CompositeS&P 500$AMGN
Asia Markets

Exchange-Traded Funds Rise, US Equities Mixed After Midday

Broad Market IndicatorsBroad-market exchange-traded funds IWM and IVV edged higher. Actively traded Invesco QQQ Trust (QQQ) added 0.5%.US equity indexes traded mixed, with materials leading gainers and financials fronting decliners after midday on Tuesday.EnergyIShares US Energy ETF (IYE) fractionally up and the State Street Energy Select Sector SPDR (XLE) down less than 0.1%.TechnologyThe State Street Technology Select Sector SPDR ETF (XLK) added 0.4%; iShares US Technology ETF (IYW) rose 0.4%, and iShares Expanded Tech Sector ETF (IGM) gained 0.3%.The State Street SPDR S&P Semiconductor (XSD) was up 1.4%, and iShares Semiconductor (SOXX) rose 1.6%.FinancialThe State Street Financial Select Sector SPDR (XLF) was 1.8% lower. Direxion Daily Financial Bull 3X Shares (FAS) declined 5.5%, and its bearish counterpart, Direxion Daily Financial Bear 3X Shares (FAZ), advanced 5.6%.CommoditiesCrude added 0.5%, and the United States Oil Fund (USO) was down 0.9%. Natural gas gained 4%, and the United States Natural Gas Fund (UNG) moved 4.1% higher.Gold on Comex slipped 0.2%, and the State Street SPDR Gold Shares (GLD) was down 0.2%. Silver added 0.3%, and iShares Silver Trust (SLV) added 0.1%.ConsumerThe State Street Consumer Staples Select Sector SPDR (XLP) added 1.1% and the Vanguard Consumer Staples ETF (VDC) rose 1%.The State Street Consumer Discretionary Select Sector SPDR (XLY) was up 0.3%. VanEck Retail ETF (RTH) added 0.4%, and the State Street SPDR S&P Retail (XRT) rose 1.5%.HealthcareThe State Street Health Care Select Sector SPDR (XLV) gained 0.6%, while iShares US Healthcare (IYH) and Vanguard Health Care ETF (VHT) added 0.8% each. IShares Biotechnology ETF (IBB) was up 1.7%.IndustrialThe State Street Industrial Select Sector SPDR (XLI) fell fractionally. Vanguard Industrials Index Fund (VIS) was up 0.1% and iShares US Industrials (IYJ) dipped 0.1%.CryptocurrencyIn midday activity, bitcoin (BTC-USD) was fractionally lower. Among cryptocurrency ETFs, ProShares Bitcoin ETF (BITO) declined less than 0.1%, ProShares Ether ETF (EETH) was down 0.6%, and ProShares Bitcoin & Ether Market Cap Weight ETF (BETH) dropped 0.5%.

Dow Jones^EEM^EXI^FAS^FAZ^GLD^IBB^IGM^IGV^IPK^IVV^IWMNasdaq Composite^IYE^IYH^IYJ^IYK^IYW^PMR^QQQ^RTH^SOXXS&P 500^SPY^UNG^USO^VDC^VHT^VIS^XLE^XLF^XLI^XLK^XLP^XLV^XRT^XSD$BETH$BITO$EETH