MARKET SNAPSHOT
U.S. stocks were mostly lower as yields on U.S. Treasurys continued to set fresh multiyear highs amid a strong batch of economic data and increased expectations that the Federal Reserve will raise interest rates at its October meeting. The dollar strengthened, while gold fell for a fourth session. Oil prices rose.
MARKET WRAPS EQUITIES
A muddled outlook for the war in the Middle East pushed bond yields higher and pulled down stocks on Thursday, with investors weighing dissonant reports on attacks and negotiations.
The Dow Jones Industrial Average fell 0.3%. Other indexes ended little changed, with the S&P 500 down a fraction of a percent and Nasdaq Composite inching higher.
Investors are losing their appetite for risk as the odds of further rate hikes from the Fed this year increase. Philadelphia Fed President Anna Paulson said on Thursday that the central bank has yet to see data indicating that inflation is coming under control. "If conditions evolve as I expect, some modest further tightening may be warranted," Paulson said.
The Fed is running short on excuses not to raise rates thanks to a sturdy labor market and signs of growth in parts of the economy. Data released Thursday shows jobless claims unexpectedly fell last week, while the manufacturing activity in the central U.S. grew at its fastest pace all summer.
Odds of a rate hike next month jumped to around 70% from 55% two days earlier, according to the CME FedWatch tool.
Most major stock indexes ended lower across Asia earlier Thursday.
Taiwan's Taiex ended down 0.3% and Hong Kong's Hang Seng Index declined 0.3%. In China, the Shanghai Composite Index shed 1.2%, the Shenzhen Composite lost 2% and the ChiNext Price Index ended 2.7% lower.
Japan's Nikkei Stock Average was a standout, rising 0.8%, though that was mostly due to catch-up trade following a three-day holiday.
South Korean markets were closed for a holiday.
Australia's S&P/ASX 200 finished 0.7% lower, while New Zealand's S&P/NZX 50 Index held steady.
COMMODITIES
Oil prices rose in a volatile session amid renewed Middle East escalation concerns after Saudi Arabia said it intercepted six ballistic missiles launched at the kingdom, while U.S.-Iran talks showed little sign of progress.
Brent crude for November delivery rose 3.4% to $106.60 a barrel, and West Texas Intermediate crude for November gained 2.7% to $94.61 a barrel. Both benchmarks had been down around 0.7% early in the session, while Brent briefly traded above $108 a barrel later in the day.
Saudi Arabia's coalition fighting in Yemen said Thursday that air defenses intercepted and destroyed six ballistic missiles launched by Yemen's Iran-backed Houthi militia. Meanwhile, Houthi military spokesman Yahya Saree said in a statement that the group had launched dozens of ballistic missiles and drones in what he described as a large-scale operation against Saudi military positions in Jazan.
Gold futures extended losses to four sessions as the market remained pressured by rising U.S. yields and dollar gains.
"The near-term outlook for gold remains cautious," Linh Tran of XS.com said in a note. "As long as the 10-year Treasury yield remains above 5%, the U.S. dollar stays strong, and markets continue to assign a high probability to an October Fed rate increase, gold's recovery attempts may remain relatively limited."
Front month gold settled down 0.4% in New York at $4,263.00 a troy ounce. Silver fell 1.4% to $63.457 a troy ounce.
TODAY'S TOP HEADLINES
U.S. Treasury Yields Hit Multiyear Highs on Economic Data, Fed Rate-Boost Expectations
Yields on U.S. Treasurys continued to set fresh multiyear highs amid a strong batch of economic data, supporting expectations the Federal Reserve will raise interest rates at its October meeting.
The 10-year Treasury yield rose to as high as 5.165%, the highest since July 2007, before settling at 5.163%. The 30-year yield increased to 5.460%, the highest since June 2004.
The U.S. Treasury Department auctioned $44 billion of seven-year notes which sold at a high yield of 5.085%, the highest since April 1993, as the government's borrowing costs keep rising with investors reluctant to lend money in the long-term in the face of increasing inflation and fiscal uncertainty.
Fed's Paulson Joins Chorus of Policymakers Predicting More Rate Increases Ahead
Anna Paulson, president of the Federal Reserve Bank of Philadelphia, joined the growing number of policymakers warning that the central bank will likely need to implement additional rate increases to rein in inflation.
In remarks at the Philadelphia Fed's Annual Fintech Conference, Pauslon said she supported raising the federal-funds rate to a range of 3.75% to 4% at last week's meeting. She characterized the higher rate as a "recalibration" designed to push inflation back to the Fed's 2% target.
"Looking ahead, if conditions evolve as I expect, some modest further tightening may be warranted," said Paulson, who is currently a voting member of the policy-setting Federal Open Market Committee. "Returning inflation to 2% is a top priority, and I will support the policy path that gets us there while carefully weighing risks to the labor market along the way."
Trump's Summit With Xi Starts With Pomp and Pageantry
WASHINGTON-A red carpet. Members of the U.S. military holding Chinese and U.S. flags on the roof of the White House. A flyover of U.S. jet fighters and a stealth bomber.
President Trump kicked off a summit with China's Xi Jinping with an extravagant welcome ceremony, as Washington and Beijing look to ease brewing tensions over the war in Iran, artificial intelligence and trade. It is Xi's first visit to Washington in more than a decade.
Trump and first lady Melania Trump shook hands with Xi and his wife, Peng Liyuan, on a red carpet outside the White House on Thursday morning. Behind them, the U.S. Marine Silent Drill Platoon, which features two-dozen newly trained infantry Marines, and U.S. Joint Forces Command performed a presidential salute.
Jeff Bezos' Blue Origin Is Fueled With $30 Billion of His Fortune
Jeff Bezos has invested $30 billion in Blue Origin since its founding in 2000, an extraordinary commitment from the Amazon.com founder into a company that aims to rival SpaceX.
Documents reviewed by The Wall Street Journal discuss that investment, which has helped Blue Origin become a large space company with sites around the country, around 15,000 employees and an ambitious growth plan.
The total investment includes $2 billion that Bezos is putting into Blue Origin as part of the company's first-ever capital raise that includes outside investors. The company has already raised $10 billion for that round, which values the company at $140 billion, according to the documents and people familiar with the matter.
Costco Reports Higher Fourth-Quarter Profit as Sales, Membership Fees Rise
Costco Wholesale reported a higher profit in its fiscal fourth quarter, boosted by growth in both net sales and membership fees.
The company logged a profit of $3 billion, or $6.75 a share, in the quarter ended Aug. 30. That compares with a profit of $2.61 billion, or $5.87 a share, a year earlier.
Revenue grew to $95.72 billion, up from $86.16 billion a year prior.
Akamai Strikes $11.6 Billion Deal With Anthropic
Artificial intelligence company Anthropic has made an $11.6 billion deal with cloud infrastructure firm Akamai for its computing services for the next seven years, Akamai announced, with an option to expand the deal by another $9 billion if more compute is needed.
Akamai stock rose nearly 18% in after-hours trading on the news.
The deal will "support Anthropic's accelerating CPU workload demands by leveraging Akamai Cloud's distributed AI infrastructure and software," Akamai said.
OpenAI Agents Tried to Hack Four More Websites While Seeking Data
OpenAI's artificial-intelligence agents were performing mundane online data-collection tasks earlier this year-and went to extraordinary lengths to get it.
Newly published findings from nonprofit AI research lab Transluce, as well as from the Australian government, found that AI agents linked to OpenAI attempted in May and June to break into university and government websites to seek information. The attempted hacks join a growing list of incidents in which AI agents have gone rogue in pursuit of their goals.
This time, however, the attempted breaches weren't tied to OpenAI evaluations of cybersecurity, where models were ordered to hack, but rather what appear to be internal training of models and benchmark tests of their ability to find public information on the internet. The agents were seeking information like Thai labor force statistics, Korean crude-oil imports and Australian dermatological data.
Amazon to Expand Robot-Making Capacity With New, $100-Million Indiana Hub
Amazon.com, already one of the world's biggest robot makers, is scaling up production as it automates more of the work inside its warehouses.
The e-commerce company said it would spend more than $100 million on a new robotics-manufacturing facility in Greenwood, Ind., which is set to open by 2028.
Amazon last month announced plans to construct another robotics hub in Austin, Texas. The new facilities will double the number of Amazon's robot-making plants to four.
Expected Major Events for Friday 03:30/THA: Aug Trade data
05:00/JPN: Aug Supermarket sales
05:30/JPN: Aug Tokyo area department store sales
05:30/JPN: Aug Nationwide department store sales
07:30/THA: Weekly International Reserves
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