Equity Slide Enters Fourth Day

US equities are set to continue a three-day slide as once again crude prices climb pushing up global bond yields, not helped by a producer prices report that came in mostly as expected with traders hoping for a cooler print.

Brent oil climbed above $102 a barrel, and the Dated Brent (spot market) benchmark was priced at $114 a barrel on Wednesday, as fresh buying from Asia tightened supplies and Iran said it’s ready for a more intense war and will escalate counterstrikes if the US continues attacking its territory and infrastructure, according to a senior official from the Islamic Republic. Tehran recently reorganized its military ranks to pivot to what it called an “offensive doctrine.” Meanwhile, President Donald Trump said he expected the war with Iran to end after the November U.S. midterm elections and threatened again to attack a site ​associated with the Islamic Republic’s nuclear program.

Meanwhile Pakistan’s Defense Minister Khawaja Asif said any attack on Saudi Arabia could activate the Mecca Defense Alliance, warning aggression against one member would be viewed as an attack on all signatories. His comments came as Saudi Arabia took several energy facilities in its south offline as the Iran-backed Houthi militants in Yemen claimed fresh strikes on the kingdom.

US Treasury yields meanwhile hit levels last seen in 2024, 2023, and 2007 in the 2-year, 10-year, and 30-year durations (charts below).

In terms of US economic data, earlier this morning we had the important PPI print (as some of the components feed through to PCE prices, the Fed’s preferred inflation metric) which came in mostly as expected, but July was revised up a tenth and comparison to year ago levels remained elevated (see post below).

We also got weekly jobless claims which remained historically subdued (detailed posts on PPI and jobless claims coming later this morning).

Later this morning we’ll get August existing home sales and US petroleum inventories, and this afternoon an auction of 30-year Treasury bonds. Hopefully it goes as well as yesterday’s

.

After the close we’ll hear from hyperscaler Oracle (ORCL) along with fellow SPX components Adobe (ADBE) and Copart (CPRT).

As of 9:15 am ET, the S&P 500 is -0.6% while the tech-heavy Nasdaq-100 index is -1.3%, and the small-cap Russell 2000 is -0.8%.

US PPI Final Demand (M/M) Aug: 0.4% (est 0.4%; prev 0.0%; prev R 0.1%)
– PPI Final Demand (Y/Y): 5.4% (est 5.3%; prev 4.7%; prev R 4.8%)
– PPI Ex Food And Energy (M/M): 0.2% (est 0.3%; prev 0.2%; prev R 0.3%)
– PPI Ex Food And Energy (Y/Y): 4.6% (est 4.6%; prev 4.2%)
– PPI Ex Food, Energy And Trade (M/M): 0.3% (est 0.3%; prev 0.4%)
– PPI Ex Food, Energy And Trade (Y/Y): 4.7% (est 4.7%; prev 4.7%)

[Note the International Update is below the US update]

Note on all charts the colored lines are daily moving averages (the average price over the given number of days):

20 = green
50 = purple
100 = blue
200 = brown

The middle panel is MACD = Moving average convergence/divergence line, a measure of momentum that compares longer term and shorter term momentum to gauge if a move is strengthening or weakening. This is probably my favorite individual indicator (it’s also the favorite of Katie Stockton, a very fine technician).

The bottom panel is RSI = Relative Strength Index (basically what it sounds like) = measures the strength of the move comparing gains to losses over the given lookback window (I use the standard 14 periods).

SPX futures (/ES) – breaking under 50-DMA and uptrend line from March lows; caution flags should be raised.

2-year yield – Highest since July 2024.

10-year yield – Highest since November 2023.

30-year yield – highest since 2007.

DXY US dollar index – rebounding but into resistance now.

US WTI crude – highest since May 21st.

Gold futures (/GC) – trying to hold 100-DMA

US copper futures (/HG) – down sharply nearly -5% after Wednesday’s all-time high.

US natural gas futures (/NG) – continuing to fall away from $3.

Bitcoin futures – down for fourth session and threatening to break its “bull flag” pattern.

Some pre-market company news:

• AeroVironment (AVAV) +5.43% as of 8:00 am ET beat fiscal first-quarter earnings and revenue expectations and issued FY27 revenue and adjusted EBITDA guidance.
• Kinetik (KNTK) +4.29% as of 8:00 am ET is weighing strategic alternatives, including a possible sale, according to Bloomberg.
• Taiwan Semiconductor Manufacturing (TSM) -1.0% as of 8:00 am ET saw August revenues rise by 53% to a record high.
• Oracle Corp. (ORCL) shares are struggling this year as Wall Street balks at the massive debt load the company has taken on to build out artificial-intelligence infrastructure. Its earnings Thursday will give an indication of how much patience investors have left for such heavy spending.
• Macy’s Inc. (M) raised its full-year outlook, but said its guidance continues to recognize there are macroeconomic and geopolitical factors that could influence discretionary spending.
• American Eagle Outfitters Inc.’s (AEO) second-quarter total comparable sales fell short of the average analyst estimate.
• JetBlue Airways Corp. (JBLU) cut its available seat miles forecast for the third quarter.
• DeepSeek rolled out an AI model that charges as little as a fraction of a cent per million tokens, ramping up the pressure on rivals from Anthropic PBC to Z.AI Co.
• Meta Platforms (META) — The parent of Facebook and Instagram added 1.4% on the back of an upgrade at JPMorgan. The firm sees “meaningful upside potential” as Meta rolls out its artificial intelligence models and products.
• Apple (AAPL) — The tech giant rose 1%, a day after it unveiled its foldable iPhone and other products. Investor response was muted Wednesday, with the stock closing slightly lower.
• Novartis (NVS) — The Swiss drugmaker rose nearly 2% after Reuters reported a major shareholder called for an overhaul of Novartis’ board to boost corporate governance. Shares fell earlier this week after the company saw three drug trial setbacks.
• Copper miners — Shares of miners fell alongside copper prices. The threat of tariffs has pushed the metal higher this year, but prices fell Thursday after hitting a record high in earlier trading. Freeport-McMoRan (FCX) tumbled nearly 7% and Southern Copper (SCCO) shed more than 6%.
• Cooper Companies (COO) – The maker of medical devices slid roughly 17% after fourth-quarter projections came in shy of the Street’s estimates.
• Enbridge (ENB) – The energy and distribution company saw shares slide nearly 3% after announcing it would acquire Tallgrass Energy’s crude transportation business for $2.55 billion.

From around TheStreet Pro:

• Helene Meisler – The Broadening Out Trade Seems to Have Petered Out
• Stephen Guilfoyle – Bessent’s Big ‘Bazooka’ Not Big Enough, Trump’s $5G Promise, Debt Woes
• James “Rev Shark” DePorre – The Fed Faces a ‘Double-Dog Dare’

Some other headline stories:

• WSJ – Top White House advisers have raised privately with President Trump the prospect that the Iran war could drag on through the remainder of his term, U.S. officials said, a message at odds with Trump’s public assurances of a swift victory.
• FT – Donald Trump pledged to issue a $5,000 “dividend” to every adult US citizen if Republicans retain control of Congress in the midterm elections, as he sought to rescue his party’s prospects with a big dose of populist economics. The payouts, which would be larger than the direct Covid-era stimulus cheques and could cost in excess of $1 trillion, would require congressional approval.
• WSJ – Here’s what you need to know about the doomsday debate around AI.
• WSJ – Pipeline company Energy Transfer (ET) is set to be the first major company to switch its primary listing from New York to the Texas Stock Exchange (TXSE), according to people familiar with the matter. Energy Transfer Executive Chairman Kelcy Warren, who Forbes estimates is worth over $9 billion, is a major backer of TXSE’s parent company. I have more than a passing interest in this as it is around 8% of my portfolio.
• TechCrunch – The adoption of AI tools by businesses slowed in August, according to spending data at 70,000 companies collected by the payments company Ramp. The latest survey shows 56% of Ramp customers paid for AI products in August, rising just 0.4% from the month before, and a major decline in AI spend per employee in the top 1% of AI-using firms in his sample, falling nearly 10% to $7,205.

International Highlights:

Europe’s benchmark STOXX 600 as of 8:00 am ET was down another -0.3% reaching levels last seen six weeks ago.

Germany’s DAX: +0.1%, U.K.’s FTSE 100: -0.3%, France’s CAC 40: +0.1%, Italy’s FTSE MIB: +0.4%, Spain’s IBEX 35: +0.4%.

The broad MSCI AC Asia Pacific Index was -0.7% filling a “gap” on the chart from last week.

Japan’s Nikkei: +0.2%, Hong Kong’s Hang Seng: -1.3%, China’s Shanghai Composite: -0.4%, India’s Sensex: +0.2%, South Korea’s Kospi: -0.3%, Australia’s ASX All Ordinaries: -1.0%.

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Some ex-US highlights:

• WSJ – Iran is increasingly trying to escalate its conflict with the U.S. as it seeks to break a stalemate in the Strait of Hormuz that is strangling its economy. At least three times in the past week, Iranian forces have launched missiles at American warships, including an aircraft carrier, taking direct aim at the U.S. Navy in a way it hasn’t done since the start of the war. Iran also fired a large missile salvo at U.S. forces stationed in Jordan on Wednesday.
• BBG – The European Central Bank increased interest rates for the second time since the Iran war broke out in February, responding to signs inflation is set to stay well above 2%. The ECB’s decision was guided by fresh projections showing inflation averaging 3% this year before slowing to 2.5% in 2027 and 2.1% in 2028. After economic growth in the euro zone jumped in the second quarter, the full-year forecast was upgraded to 0.9%.

• RTRS – Deep in Arctic waters near the remote Svalbard archipelago this spring, NATO allies caught Russian subs training to unleash a secret weapon designed to disable critical undersea cables without leaving any fingerprints. A joint operation involving Britain, Norway and the United States tracked and confronted the Russian vessels at sea, said the two officials, speaking ​on condition of anonymity. The vessels were prevented from completing their exercise and eventually left the area.
• BBG – The EU’s drive to prioritize its own industries took a step forward today when the European Commission unveiled a suite of measures aimed at boosting homegrown innovation and competitiveness. New public-procurement rules, which we first reported in July, aim to encourage governments and local authorities to favor European suppliers in critical public services.
• BBG – The yield gap between Chinese and US 10-year sovereign bonds widened to 317 basis points — the widest on record, according to Bloomberg data dating back to 2002 — raising the threat of accelerated capital outflows and a weaker yuan.

• BBG – American companies in China are more upbeat about their prospects, according to a survey by the American Chamber of Commerce in Shanghai, as profitability improves and concerns ease over tensions between Beijing and Washington. 58% of respondents were optimistic about the five-year outlook in China, up 17 percentage points from 2025. Some 78% of companies were profitable in 2025, the highest rate since 2019.
• BBG – A measure of French bond risk rose to its highest level since Europe’s sovereign debt crisis more than a decade ago, a sign investors are increasingly wary over the country’s yawning budget deficit and uncertain politics. The additional yield on France 10-year bonds over their German counterparts rose to 90 basis points as rising oil and gas prices triggered a selloff across European markets on Wednesday. That’s the highest closing level for the spread since 2012.

• BBG – Germany paid its highest borrowing cost for 10-year bonds since 2009, as investors demand higher compensation for sticky inflation and increased political uncertainty. The country’s finance agency sold €4.2 billion ($4.9 billion) of bonds maturing in August 2036 in an auction on Wednesday at an average yield of 3.39%, the highest for that maturity in 17 years.

• BBG – French industrial production fell unexpectedly in July, adding to warning signs for an economy already skirting recession. Output fell 0.4% because of persistent weakness across manufacturing in July, statistics agency Insee said. The median estimate of economists in a Bloomberg survey had pointed to an increase of 0.2%.

• BBG – The Royal Institution of Chartered Surveyors said its index of house prices improved slightly to minus 28 in August, up from minus 29 the previous month. The indicator has remained below zero — meaning more agents report price falls than rises, since April 2025. Agents expect further declines over the next three months, with a particularly weak outlook in London.
• BBG – But data from lender Lloyds showed UK house prices fell on an annual basis for the first time since November 2023 in August as monthly prices slipped 0.2%.
• BBG – The Turkish central bank left its main interest rate unchanged, signaling policymakers’ caution in balancing a slowdown in inflation with a jump in crude oil prices. The Monetary Policy Committee, led by Governor Fatih Karahan, held the one-week policy rate at 37% on Thursday, matching the near-unanimous consensus in a Bloomberg poll of 19 analysts.

As a reminder, as I mentioned in the Week Ahead: “I want this piece, and to a larger extent the intra-week pieces (morning, evening, and economic updates), to evolve in whatever way is most meaningful for readers here. In that regard, I highly encourage an open and robust dialogue. Please post or email comments, questions, pushback, or suggestions on what I write, and especially what you would like to see more or less of. I read all the feedback, and I promise to be responsive as the newsletter settles into its new home. If you do put a comment in on a post please be sure to put @NeilSethi in front”