OMM Redaksiyası
US stocks ended the third quarter with mixed results as rising energy costs and bond yields pressured the Dow Jones Industrial Average, while demand for technology shares helped lift the S&P 500 and Nasdaq Composite.
From July to September, the Dow dropped 2.7%, while the S&P 500 gained 2% and the Nasdaq Composite rose 2.5%. All three indexes remained higher for the first nine months of the year: the Dow was up 5.9%, the S&P 500 had gained 11.8%, and the Nasdaq was ahead 15.6%.
How markets moved through the quarter
Investors began the quarter weighing geopolitical risks, higher energy costs and uncertainty over Federal Reserve policy. Oil prices rose in July amid supply concerns and developments surrounding a ceasefire in the Middle East, renewing fears that higher production and transport costs could keep inflation elevated.
Inflation indicators proved more persistent than expected, strengthening expectations that interest rates could remain high for longer. A rotation from technology stocks into energy companies contributed to a 0.3% gain for the Dow in July, while the S&P 500 slipped 0.1% and the Nasdaq fell 3.2%.
Stocks broadly rebounded in August despite pressure in the bond market. Strong economic data and increased federal borrowing needs pushed long-term Treasury yields to multiyear highs. The Treasury Department said it would at least double the size of its long-term bond buyback operations in a bid to support market liquidity, but the move did not fully ease bond-market strain.
US public debt exceeded $40 trillion for the first time on Aug. 18, while high yields increased the cost of servicing it. At Jackson Hole, Fed Chair Kevin Warsh stressed that the fight against inflation was not over and that further rate increases remained an option. The Dow rose 1.3% in August, while the S&P 500 gained 2.6% and the Nasdaq advanced 3.9%.
Rate decision and bond-market pressure
In September, the Federal Open Market Committee raised its policy rate by 25 basis points to a range of 3.75% to 4%, its first increase since 2023. The Fed also lifted its forecast for the federal funds rate at the end of the year from 3.8% to 4.1%, pointing to the possibility of another increase.
With no concrete steps towards peace in the Middle East and concerns over energy supplies, Brent crude futures approached $110 a barrel in mid-September. Diesel prices reached $6.53 a gallon on Sept. 22, according to the American Automobile Association.
Higher energy costs amplified inflation concerns and contributed to heavy selling in bonds. The 10-year US Treasury yield reached its highest level since 2007, while the 30-year yield climbed to its highest point since 2002. The average rate on 30-year US mortgages rose to 7.3% last week, its highest level since November 2023.
For September, the Dow lost 4.3% and the S&P 500 edged down 0.5%, while the Nasdaq gained 1.9%. Over the full quarter, the Dow’s decline reflected its exposure to rising input costs and tighter credit conditions. Continued institutional demand for chipmakers, cloud infrastructure and artificial intelligence helped support the broader market.
First-half swings shaped the year
The third-quarter divergence followed sharp moves in the first half. In the first quarter, market sell-offs came amid tensions in the Middle East and shipping disruptions. From January to March, the Dow fell 3.6%, the S&P 500 dropped 4.6% and the Nasdaq declined 7.1%.
A fragile US-Iran ceasefire at the start of the second quarter eased some geopolitical concerns. Lower energy costs and excitement around SpaceX’s initial public offering helped drive a rebound: the Dow gained 12.9%, the S&P 500 rose 14.9% and the Nasdaq climbed 21.4% from April to June.
