US STOCKS-Wall Street ends down as oil prices, Treasury yields rise
US STOCKS-Wall Street ends down as oil prices, Treasury yields rise Updates with market close
By Noel Randewich
Sept 23 (Reuters) - Wall Street ended lower on Wednesday, pulled down by Alphabet and Amazon, as Treasury yields climbed and Iran's president said Tehran would never surrender to US pressure.
Oil prices rose almost 4% and the S&P 500 energy sector index .SPNY rallied after Iranian President Masoud Pezeshkian's speech at the UN, a day after US President Donald Trump warned he could "annihilate" Iran.
A survey showed US business activity raced to a more than five-year high in September, pushing government bond yields higher and raising expectations the Federal Reserve will increase interest rates at its October meeting.
Yields on two-year US2YT=RR Treasuries touched their highest since 2024, while 10-year US10YT=RR Treasury yields hit their highest since 2007.
"The stock market wants a resolution to the (Middle East) conflict, and if we don't get that, we will have higher rates for longer, and that's going to continue to weigh on the equity market," said Lauren Cassidy, chief investment officer at Founders 100 ETF in Dallas.
Meta Platforms META.O added to big gains this week following a strong reception of its "Muse" AI assistant, which analysts say could benefit tech infrastructure stocks, while challenging banks, online shopping platforms and other consumer businesses.
Google parent Alphabet GOOGL.O dropped, as did Amazon AMZN.O, which has blocked Muse from its shopping platform.
The PHLX chip index .SOX slid, with Nvidia NVDA.O losing ground.
Expedia EXPE.O and Airbnb ABNB.O also declined.
The Nasdaq recorded record-high closes in the previous two sessions as Wall Street remained optimistic about AI-related companies. The S&P 500 is less than 2% below its record high close on August 13.
US President Donald Trump welcomes Chinese President Xi Jinping to Washington on Wednesday for a three-day visit. The agenda includes extending the trade truce reached last year between the two superpowers, AI regulation and US arms sales to Taiwan.
According to preliminary data, the S&P 500 .SPX lost 57.74 points, or 0.74%, to end at 7,706.39 points, while the Nasdaq Composite .IXIC lost 308.24 points, or 1.10%, to 26,943.61. The Dow Jones Industrial Average .DJI fell 340.39 points, or 0.66%, to 51,523.30.
The S&P 500 is trading just under 19 times expected earnings, its lowest valuation since 2023, according to LSEG data. AI-related heavyweights are responsible for much of the recent increase in earnings expectations.
Markets also parsed comments from Federal Reserve Governor Michael Barr, who said the central bank will likely need to deliver further interest rate hikes as inflation remains north of the Fed's 2% target.
Traders are now pricing in a 71% chance that the Fed will raise interest rates at its policy meeting next month, the CME Group's FedWatch Tool showed.
Casual dining chain Cracker Barrel CBRL.O rallied after beating fourth-quarter sales estimates.
Paychex PAYX.O dropped after the HR and payroll services provider said that its largest segment missed first-quarter revenue estimates.
(Reporting by Johann M Cherian, Avinash P and Shashwat Chauhan in Benglauru, and by Noel Randewich in San Francisco; Editing by Joyjeet Das, Shinjini Ganguli and David Gregorio)