Rising Treasury yields push Wall Street lower despite AI-driven software gains

Wall Street’s major averages fell on Thursday as a deepening bond sell-off drove the 10-year Treasury yield to 5.3445%, a peak not seen since 2002, eclipsing gains in AI-related software stocks. The rise in yields pressured rate-sensitive groups, pulling housing down 1.4%, banks 2.2%, and dragging real estate, utilities and consumer staples into the red, while the VIX climbed to 17.23 points. Software firms led the market’s resilience, with Accenture soaring 22% on a strong full-year revenue forecast, Cognizant up 10%, and IBM gaining 4.2%; Micron’s revenue outlook also supported the AI theme despite a modest share dip.

The Dow slipped 0.46%, the S&P 500 fell 0.22%, and the Nasdaq lost 0.07%, as investors await third-quarter earnings that will reveal corporate profitability under tighter financing conditions. Fed policy expectations remained mixed, with traders pricing a 63% chance of a rate pause in October, while comments from several Fed officials, including Minneapolis President Neel Kashkari, hinted at continued scrutiny of inflation and labor market dynamics. Meanwhile, Constellation Energy rose after signing a 20-year power purchase agreement with Amazon.com.