Benchmark indices on Wall Street had a mixed session on Thursday, October 8, as they reacted to a slew of news flow from rising bond yields to US President Donald Trump’s remarks and higher oil prices. At the end of the session, the Dow Jones outperformed its peers.
At the lows of the day, the Dow Jones was down over 300 points. The index recovered all of those losses to end with gains of 50 points. The S&P 500 and Nasdaq though were underperformers with the S&P 500 ending 0.5% lower and retreating further from record high levels. The Nasdaq Composite fell 1.25%, while the Nasdaq 100 was down 1.4%.
Why Did The Nasdaq Underperform On Thursday?
Tech stocks linked to the chip-making and AI theme sank on Thursday, dragging the Nasdaq lower, after OpenAI’s revenue disclosure fell short of what was being reported earlier.
In an investor presentation, OpenAI disclosed that its annualized revenue run-rate is currently at $50 billion at the end of September, which is well below the $68 billion as was being reported last month.
OPenAI also said that the growth in Q3 stood at 77%, while its enterprise business grew 107% from last year.
Shares of Nvidia fell 3% after OpenAI’s disclosure, while those of Oracle and CoreWeave fell 6% and 8% respectively. Shares of Chipmakers AMD, Broadcom, Intel and Super Micro also dropped between 4% to 5%.
Why Dow Jones Recovered From The Lows?
Multiple factors were behind the recovery on the Dow Jones.
First, US President Donald Trump reacted to the higher oil prices and said that the US is engaging in productive discussions with Iran and that they will not be attacking Iran before the mid-term elections on November 3. Trump made these remarks in a post on Truth Social.
Interestingly, Trump’s remarks come just a day after he said at a campaign rally that a deal with Iran is not something that he wants.
Another reason behind the recovery on the Dow Jones was the cool off in bond yields after a strong 30-year bond auction. The $22 billion sale drew healthy demand, culminating a week in which bond sales of every tenor, be it three, 10 or 30, drew healthy investor demand, albeit with higher yields.
Thursday’s 30-year bond auction drew a yield of 5.618%. Additionally, the US Treasury also repurchased bonds of 20 and 30-year tenor worth $6 billion, higher than the $4 billion estimated.
After testing highs of 5.35%, the US 10-year yield cooled off to 5.23%, while the 30-year note is down to 5.6% after hitting levels of 5.7% earlier in the day.
Oil Remains Higher
Crude oil prices remain higher with Brent around $104 as Hurricane Isaias is set to make landfall at the Gulf of Mexico region late-Friday, early-Saturday.
As much as 1.3 million barrels per day of crude production has gone offline due to the storm, which is more than 60% of the region’s output.
Prices also remained higher due to multiple attacks at Saudi Arabia’s Riyadh airport, prompting multiple airlines to cancel flights, as the fight between the Saudi administration and the Houthis in Yemen continues to escalate.
Elsewhere, PepsiCo shares jumped nearly 4% even as the company cut its full-year profit outlook, but its organic sales growth during the quarter was the highest in over three years.
Delta Airlines will be reporting their results later today, before a slew of macro and earnings reports begin to trickle into Wall Street starting next week.