[New York Stock Exchange] Ceasefire Fails, Oil Prices and Yields Rise... All Major Indices Close Lower

AI stocks lead the market downturn

On the weekend prior to publication, U.S. President Donald Trump rejected Iran's conditional ceasefire proposal. As a result, both international oil prices and U.S. Treasury yields rose, and all three major indices on the New York Stock Exchange closed lower on September 28 (local time).

On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 51,481.51, down 347.11 points (0.67%) from the previous session. The large-cap S&P 500 index closed at 7,683.69, down 59.72 points (0.77%), while the tech-heavy Nasdaq Composite ended at 26,820.38, falling 248.33 points (0.92%).

View of the New York Stock Exchange. New York, USA - Photo by Yoonjoo Hwang

On this day, market sentiment was dampened due to the sharp rise in U.S. Treasury yields. During intraday trading, the market recovered some of its losses amid the possibility of eased sanctions on Iran. However, it was not enough to offset the pressure from the rising yields on long-term bonds.

The main factor weighing on the markets from the early session was Treasury yields. The yield on the 10-year U.S. Treasury surpassed 5.2%, and the 30-year yield broke through 5.5%, reaching their highest levels in several years. According to CNBC, the accelerating rise in long-term yields, which had continued since last week, intensified selling pressure, particularly on growth and technology stocks.

Justin Burgner, portfolio manager at Gabelli Funds, explained, "Treasury yields rose significantly again today, which is causing weakness in stock prices," adding that the simultaneous pressure from strong capital demand for AI hyperscalers' massive investments and burdens from high interest rates are weighing on the market.

As expectations for a U.S.-Iran ceasefire diminished, oil prices edged up and inflation concerns resurfaced, leading to a modest increase in U.S. Treasury yields. On September 25, Iran's Foreign Minister Abbas Araghchi proposed reopening the Strait of Hormuz and resuming nuclear negotiations within seven days if the U.S. were to stop so-called "acts of aggression," including maritime blockades and economic warfare, and unfreeze Iranian assets.

However, the following day, according to a report by The Wall Street Journal (WSJ), President Trump rejected Iran's conditional offer and reportedly told his aides that he expected U.S. airstrikes on Iran to resume after the November midterm elections.

As a result, oil prices also rose slightly. On the New York Mercantile Exchange, the West Texas Intermediate (WTI) crude oil for November delivery settled at $92.60 per barrel, up 0.21% from the previous session. At the ICE Futures Exchange, November Brent crude finished at $105.28 per barrel, a 0.92% increase from the previous close.

Shares related to AI led the market declines. AMD fell by 3.6%, Micron was down 2.6%. Meta plunged 4.8%, and both Amazon and Microsoft each fell by about 1%.

In contrast, Nvidia stood out, rising 1.7%. On the same day, Nvidia announced an additional $15 billion share buyback plan, bringing the total share buyback program to $235 billion.

Within the Dow, Boeing experienced a marked drop. Boeing shares plunged around 7% after the U.S. Federal Aviation Administration (FAA) stated it would not certify the 737 MAX 10 model until a new software defect has been assessed.

All three major indices at one point deepened their losses during intraday trading. The Dow fell by more than 400 points and the S&P 500 declined by about 1%. However, around noon, CNN and Axios cited a White House official saying that President Trump could consider easing sanctions on Iran in relation to the nuclear issue, which helped market sentiment recover somewhat. As international oil prices retreated sharply from their intraday highs, stocks also rebounded from their lows.

The increase in oil prices due to heightened U.S.-Iran tensions is cited as a key burden on the market in recent times. Last week as well, geopolitical instability in the Middle East and inflationary pressures heightened market volatility, while growing expectations for additional monetary tightening by the Federal Reserve added caution to the bond market.

This content was produced with the assistance of AI translation services.