Wall Street moved lower on Thursday as a sharp rise in US Treasury yields outweighed strength in software stocks, pushing the S&P 500 to a two-week low. The market is entering the fourth quarter with investors balancing resilient corporate earnings and technology demand against higher inflation risks, oil prices and long-term borrowing costs.

Treasury Yields Become the Dominant Market Pressure

The benchmark 10-year Treasury yield touched 5.3445%, its highest level since April 2002, extending a powerful selloff in global government bonds. The yield also recorded its largest quarterly increase since 1994, underscoring the scale of the repricing taking place across fixed-income markets.

The latest increase followed US manufacturing data showing a sharp rise in input prices. The Institute for Supply Management’s measure of prices paid climbed to 77.9 in September from 71.1 in August, adding to concerns that higher energy and material costs could keep inflation elevated.

Higher long-term yields are particularly significant for equities because they increase the discount rate applied to future corporate earnings. They can also raise financing costs for companies and reduce the relative appeal of stocks compared with government bonds.

Software Stocks Provide a Partial Counterweight

Technology remained one of the stronger areas of the market, with the S&P 500 software index gaining 0.8%. The move was supported by Accenture, whose shares surged after the IT consulting company issued a stronger-than-expected revenue outlook for fiscal 2027. Its forecast helped lift shares of peers including Cognizant and IBM.

Micron Technology also offered support for the broader AI investment theme after forecasting quarterly revenue above analyst expectations and reporting $32 billion in customer commitments under supply agreements. However, Micron shares still declined during the session after having nearly quadrupled earlier in the year.

The divergence illustrates that investors continue to distinguish between companies with visible technology-driven demand and sectors more directly exposed to rising financing costs.

Oil Prices Add to Inflation Concerns

Energy markets provided another source of pressure. Brent crude jumped about $3 to $101.76 a barrel after China suspended fuel exports, raising concerns about already constrained global fuel markets. Higher oil prices can feed directly into transportation and production costs while complicating central banks’ efforts to contain inflation.

Rate-sensitive areas consequently weakened, with housing stocks falling 1.1% and banks declining 1.3%. Real estate, utilities and consumer staples also moved lower, while the Cboe Volatility Index rose to 17.07, its highest level in two weeks.

Fourth-Quarter Earnings Face a Higher Bar

For investors in Israel and global markets, the central question is whether corporate earnings can continue to offset a structurally higher cost of capital. The S&P 500 remains supported by strong profit expectations, but elevated Treasury yields are forcing markets to reassess valuations and the sustainability of AI-related spending.

Third-quarter earnings, which begin in mid-October, will provide an important test. Investors will be watching corporate guidance, margins, borrowing plans and technology spending alongside inflation and labor-market data. The interaction between earnings growth and Treasury yields is likely to remain a defining factor for US equities as the fourth quarter develops.