More swings for bond yields rattle financial markets worldwide

NEW YORK (AP) — More swings in the bond market are rattling stock markets around the world on Thursday and offsetting optimism that the artificial-intelligence industry can keep climbing.

The S&P 500 slipped 0.3% and may be heading toward its seventh drop in the last eight days. The Dow Jones Industrial Average was down 255 points, or 0.5% as of 11:45 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.

The losses were sharper in Europe, where bond yields saw a significant jump overnight. London's FTSE 100 sank 1.6% after the yield on the 10-year U.K. government bond leaped as high as 5.53% before falling to 5.37% and then charging upward again. The CAC 40 in Paris dropped 1.5% following similar swings for the 10-year French government bond's yield.

High yields slow the economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments.

Yields are on the rise for a range of reasons, including worries about high inflation and oil prices, signals that the U.S. economy remains solid and governments' insistence to continue to spend much more money than they bring in.

Those worries don’t look to be going away anytime soon, and oil prices climbed again Thursday to keep the pressure up on inflation. The price for a barrel of Brent crude added 3.7% to $101.61 for its latest yo-yo move on uncertainty about when the war with Iran will allow the global oil industry to return to normal.

Further reports also signaled the U.S. economy is powering through its many challenges. Fewer U.S. workers applied for unemployment benefits last week, which could mean fewer layoffs. That followed a report on Wednesday that said the U.S. economy’s overall growth was even stronger in the spring than earlier thought.

A separate report on Thursday said growth for U.S. manufacturing also continued in September. Potentially more concerning in that report from the Institute for Supply Management was that increases in prices accelerated, which could mean further pressure on inflation.

The yield on the 10-year Treasury briefly neared 5.34% following the manufacturing report, before pulling back to 5.25% from 5.29% late Wednesday. It nevertheless remains near its highest level since 2002, and it's up from less than 5% just last week and from less than 4% before the war with Iran began.

High yields can hurt real-estate owners in particular. Not only do they raise the cost of borrowing, they can also make investors looking for income leave real-estate stocks and their dividends for bonds.

BXP, which owns office buildings around the country, sank 1.9%. Alexandria Real Estate Equities, which owns campuses for life sciences companies, fell 3.2%.

Helping to limit Wall Street's losses was strength for technology stocks after Micron Technology delivered a stronger profit report for the latest quarter than analysts expected.

The maker of memory chips for computers said growth is strengthening, and it gave forecasts for upcoming profit and revenue that topped analysts’ estimates. CEO Sanjay Mehrotra said it’s benefiting from the AI boom, which is driving demand for memory.

Micron’s stock fell 1.8%, which some analysts attributed to how much its stock had already jumped before the profit report. It came into the day with a gain of more than 270% for the year so far, towering over the less than 12% rise for the overall S&P 500.

But other AI-related stocks benefited from Micron’s optimism about continued demand related to AI. Applied Materials rose 2.3%, and Nvidia added 0.4%.

Outside of tech, Accenture leaped 17.3% after the consulting and services company reported stronger profit for the latest quarter than analysts expected. It saw growth around the world, from the Americas to Asia.

In stock markets abroad, Asian indexes did better than the rest of the world thanks to optimism around AI following Micron’s profit report. Japan’s Nikkei 225 jumped 3.3%, and South Korea’s Kospi climbed 1.9%.

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