U.S. Stocks Drop as High Yields Weigh on Markets

U.S. Treasury yields continued to climb, and international oil prices rose, increasing market expectations for further rate hikes by the Federal Reserve. On Thursday (24th), major U.S. stock indices mostly declined. The Dow Jones Industrial Average fell 0.19%, the S&P 500 dropped 0.47%, the Nasdaq Composite declined 0.77%, and the Philadelphia Semiconductor Index (SOX) tumbled 2.09%.

The bond market sell-off persisted, with the 30-year U.S. Treasury yield surging to 5.446%, the highest level since June 2004. The benchmark 10-year U.S. Treasury yield also rose to 5.15%, approaching its highest level since July 2007.

The sharp rise in yields has heightened expectations for tighter monetary policy. According to the CME FedWatch tool, the market's probability of a Fed rate hike in October has rapidly increased from around 55% a week ago to over 70%. Interest rate swaps now fully price in three potential rate hikes over the next year.

Oil prices became a key driver of market volatility. Brent crude futures broke above $105 per barrel, while West Texas Intermediate (WTI) crude rose to around $93 per barrel. Geopolitical tensions have intensified concerns over energy supply. Combined with strong U.S. Purchasing Managers' Index (PMI) data, fears of renewed inflation driven by both demand and cost pressures have grown.

One of Thursday’s key highlights was the much-anticipated meeting between Trump and Xi Jinping, with U.S.-China trade relations drawing significant attention. On Wednesday, U.S. Treasury Secretary Scott Bessent stated that the world’s two largest economies have agreed to extend their 'tariff truce' agreement by two months. Originally set to expire in November, the agreement—signed last year—has paused a tit-for-tat trade war that could have disrupted global economic growth.

As of around 9:00 PM Taipei time on Thursday:

- Dow Jones Industrial Average: down 98.65 points (0.19%), at 51,412.94 - S&P 500: down 36.33 points (0.47%), at 7,669.70 - Nasdaq Composite: down 206.73 points (0.77%), at 26,729.30 - Philadelphia Semiconductor Index: down 261.71 points (2.09%), at 12,272.57 - TSMC ADR: down 1.13% to $441.89 per share - 10-year U.S. Treasury yield: flat at 5.12% - New York light crude: up 1.67% to $93.70 per barrel - Brent crude: up 1.95% to $105.09 per barrel - Gold: down 0.18% to $4,280.04 per ounce - U.S. Dollar Index: up 0.13% to 101.26

Key stocks:

- Oracle (ORCL-US): down 4.57% to $137.93

Oracle has issued a 'force majeure' notice to Stack Infrastructure, a developer under Blue Owl Capital, regarding 'Project Jupiter,' a massive AI data center in New Mexico. Oracle is attempting to delay payments if the project fails to go online as planned in 2028, aiming to reduce financial risk rather than terminate the lease outright.

'Project Jupiter' is designed with a power capacity of up to 2.45 gigawatts (GW), sufficient to power approximately 1.8 million households. It is a flagship project under the $400 billion Stargate AI infrastructure initiative led by OpenAI, SoftBank, and Oracle.

- Meta (META-US): up 1.29% to $753.68

Bank of America maintained Meta’s 'buy' rating with a target price of $810. The bank believes Meta’s newly launched personal AI assistant, Muse, will serve as the core of consumer AI and will be fully integrated across Meta’s products and smart glasses.

Additionally, its monetization path is becoming clearer: by linking with external services like Walmart and Shopify, Meta plans to generate revenue through transaction fees, expanding from advertising into a new transaction gateway.

- Starbucks (SBUX-US): flat at $94.14

Starbucks will close approximately 250 underperforming stores in the U.S. and Canada this week, about 1% of its total North American store count. This move is part of CEO Brian Niccol’s strategy to reshape the coffee chain’s business.

This store closure follows a previous round announced in September last year, targeting locations that failed to meet financial performance targets or where Starbucks sees limited potential for improvement.