US stock indexes rose today as weakness in crude oil prices pushed bond yields lower, improving market sentiment. The S&P 500 Index gained 0.61% to post a 1.5-week high, while the Nasdaq 100 Index climbed 1.33% to a 5-week high. The Dow Jones Industrial Average added 0.17%. Investors also watched for a summit later this week between Presidents Donald Trump and Xi Jinping, with positive anticipation lifting equity markets.
The decline in energy costs provided a key tailwind for broader markets. October WTI crude oil prices fell more than 3% to a 1-week low, driven by diplomatic efforts to end the US-Iran conflict and signs that crude flows remain steady through the Strait of Hormuz. President Trump indicated he is likely willing to meet with Iranian President Masoud Pezeshkian during the UN General Assembly in New York this week. Admiral Brad Cooper, head of US Central Command, noted that crude and LNG flows through the Strait over the past two weeks are running at a six-month high.
This drop in oil prices eased inflation expectations, supporting the bond market. The 10-year T-note yield decreased by 3.9 basis points to 4.957%. However, yields fell back from their best levels after hawkish comments from Chicago Fed President Austan Goolsbee. Goolsbee suggested that to restore price stability, the Federal Reserve may need to raise interest rates further, which could lead to drops in employment, wages, and growth. Additionally, the US Treasury is auctioning $211 billion in T-notes and floating-rate notes this week, beginning with Tuesday's $69 billion auction of 2-year T-notes.
Sector performance was mixed, with technology and digital assets leading gains. The iShares Semiconductor ETF (SOXX) rose more than 2% to a 1-month high, driven by strength in chipmakers. ARM Holdings Plc (ARM) gained over 10%, leading the Nasdaq 100, while Intel (INTC) rose more than 7% to lead the S&P 500. Advanced Micro Devices (AMD) also climbed more than 7%. Cryptocurrency-exposed stocks followed Bitcoin's price surge to a 7.5-month high. Bitcoin rose more than 4%, building on a previous 5% gain after the SEC moved forward with a plan to allow digital versions of securities to trade in the US. Strategy (MSTR) jumped more than 8%, and Circle Internet Group (CRCL) and Coinbase Global (COIN) rose more than 5%.
In contrast, energy stocks declined alongside crude prices. ConocoPhillips (COP), Diamondback Energy (FANG), ExxonMobil Holdings (XOM), Halliburton (HAL), and Occidental Petroleum (OXY) all dropped more than 2%. Chevron (CVX) fell more than 1%, leading losers in the Dow Jones Industrials. Cybersecurity stocks also performed well, with CrowdStrike Holdings (CRWD), Cloudflare (NET), Okta (OKTA), and SentinelOne (S) each gaining more than 3%.
Overseas markets mirrored the positive tone. The Euro Stoxx 50 advanced 1.36%, and China's Shanghai Composite closed up 0.97% at a 1.5-week high. Japanese markets were closed for the Respect-for-the-Aged Day holiday. European government bond yields also moved lower, with the 10-year German bund yield falling to a 1-week low of 3.442% before settling at 3.451%, down 6.8 basis points.
The German Bundesbank released its monthly report today, stating that Q3 GDP will expand only "modestly" due to short-term drivers like low water levels in the Rhine River. The bank expects growth to pick up in Q4 but warned that persistently high prices for crude oil, natural gas, and electricity could delay the return of the inflation rate to 2%. Markets are currently discounting a 51% chance of a 25 basis point Fed rate hike at the next FOMC meeting on October 27-28, and a 62% chance of a similar hike by the ECB on October 29.