The Closing Bell
Hawkish Fed minutes and a 24-year spike in Treasury yields pulled growth stocks lower all session, but a split emerged between rate-sensitive sectors and the AI mega-caps that keep finding buyers.
The Fed turned the tape.
The September FOMC minutes, released midday, showed every participant backed the 25 basis point hike and most expect another increase before year-end, with inflation risks still seen skewed to the upside and some officials flagging that AI-driven capex could push demand past supply. Treasury yields responded by spiking to levels not seen in roughly two decades, and the move rippled through every rate-sensitive corner of the market. Software, semiconductors, homebuilders, construction names, and data-center infrastructure stocks all slid as investors rotated out of leveraged, long-duration growth exposure. Small caps (IWM) bore the brunt, down 1.3%, more than double the decline in the S&P 500 (SPY), which closed off 0.2%, with the Nasdaq-100 (QQQ) also down 0.2%. Long bonds (TLT) slipped further and gold (GLD) fell 1.7% as the dollar (UUP) firmed. Crypto caught the same downdraft, with bitcoin, ether, XRP and dogecoin all sliding as yields climbed.
AI mega-caps held the line.
Even as chips and software sold off broadly, Amazon (AMZN) and Alphabet (GOOGL) bucked the tape, up 1.4% and 0.8%, respectively, on bullish AWS and AI-agent growth commentary and news that Meta and Google are putting $300 million into a Zuckerberg-backed AI biology venture. Microsoft (MSFT) eked out a gain after OpenAI unveiled GPT-6 and Microsoft confirmed Nvidia (NVDA)-powered RTX Spark machines ship next week, though Nvidia itself slipped 0.7% on the broader chip rotation. CoreWeave (CRWV) was the session's weak spot in the group, down 3.5% on a report flagging hidden risk in its $2.6 billion AI loan tied to uptime guarantees.
Caterpillar led single-stock losers.
Caterpillar (CAT) tumbled 5.8% after the FTC and USDA said they're seeking public comment on agricultural equipment manufacturing and distribution practices, raising antitrust overhang concerns. On the upside, Moderna (MRNA) rallied on an expanded Merck and Tempus collaboration plus a Morgan Stanley price-target bump to $95. Hewlett Packard Enterprise hit 52-week highs. Geopolitical risk stayed elevated, with a tanker reportedly struck by projectiles near Qatar and fresh Houthi strikes on Saudi infrastructure, though oil (USO) still closed down 0.7%.
After the bell and tomorrow.
Levi Strauss, Applied Digital, and Resources Connection report after the close tonight, with reactions due before tomorrow's open. Crude inventories drew down 3.19 million barrels today, a modest offset to the yield story. Traders will be watching whether Wednesday's hawkish minutes carry into October rate expectations, where futures still aren't pricing a hike.
Bottom line: the Fed's hawkish minutes and surging yields punished rate-sensitive growth stocks, but AI mega-cap strength kept the major indexes from a deeper slide.