Treasury yields rise amid inflation worries S&P 500 ends down as Treasury yields rise and traders fret about inflation (copy)

U.S. stocks ended down Thursday after producer price data for August and surging oil prices stoked worries the Federal Reserve will hike interest rates next week, while climbing Treasury yields made stocks less attractive.

The Nasdaq fell 0.65% to 26,081.73 points, while the Dow Jones Industrial Average declined 0.6% to 52,064.10 points.

The S&P 500 dropped 0.58% to end the session at 7,591.75 points. It lost 2% in the past four sessions, its deepest four-day loss since June. It's down nearly 3% from its record high close on Aug. 13, but remains up 11% for the year.

Heavyweight chipmakers lost ground, with Nvidia down 2.3% and Micron Technology losing 4.7%, both weighing on the S&P 500. Apple rallied 3.6% a day after launching a $1,999 iPhone.

With supply routes through both the Strait of Hormuz and the Red Sea disrupted by the U.S.-Israeli war on Iran, Brent crude jumped 6% to $107 a barrel, adding to inflation worries and fueling expectations the Fed will raise interest rates at its policy meeting Wednesday.

Traders now see a 70% chance the Federal Reserve will raise interest rates by at least 25 basis points next week, up from about 64% before Thursday's report, the CME FedWatch tool showed.

Yields on 10-year Treasury notes rose to their highest in nearly three years, while 30-year Treasury yields hit their highest in more than 19 years and 2-year Treasury yields reached their highest in more than two years.

"Yields are going up at the short end of the curve because the Fed is probably going to hike in the next couple months. Yields are going up at the long end of the curve because of debt and deficit issues, and sticky inflation," said Ross Mayfield, an investment strategy analyst at Baird in Louisville, ?Kentucky.

Data showed Thursday that the U.S. producer price index increased in line with expectations in August on a monthly basis amid a rebound in the cost of energy products. Investors will pay close attention to Friday's August consumer price data.

Nine of the 11 S&P 500 sector indexes declined, led lower by materials, down 1.45%, followed by a 0.91% loss in information technology.

The S&P 500's recent decline, coupled with a strong earnings outlook, has the benchmark trading at 19 times expected earnings - its cheapest since April 2025, when U.S. President Donald Trump's announcement of broad tariffs threw global markets into a tailspin.

In Thursday's trading, Macy's fell 4.7%. The struggling department-store operator raised its annual forecasts but not enough to impress investors.

American Eagle Outfitters dropped 14% to its lowest since October as the apparel maker reiterated its annual comparable sales forecast amid choppy discretionary spending.

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