U.S. stocks staged a comeback on Thursday as falling Treasury yields helped Wall Street recover from an early selloff, although semiconductor stocks continued to struggle. The Dow Jones Industrial Average jumped more than 500 points, or roughly 1%, while the S&P 500 reversed earlier losses to gain 0.3%. The Nasdaq Composite remained lower, slipping about 0.2% after earlier falling more than 1%.
The rebound followed two difficult days for technology stocks as investors questioned the mounting debt behind the artificial intelligence infrastructure boom. A flight into government bonds sent the 10-year Treasury yield tumbling toward 5.05%, providing some relief for equities even as fresh wholesale inflation data and disappointing reactions to chip earnings kept markets unsettled.
Market Movers:
- Rocket Lab (RKLB) -11%: Shares plunged after the aerospace company pushed the inaugural launch of its Neutron rocket from 2026 into 2027. The delay raises concerns about development costs and pushes back Rocket Lab's plans to compete more directly in the medium-lift launch market.
- Ericsson (ERIC) +7%: Shares rallied after the telecommunications equipment maker delivered stronger-than-expected quarterly results, supported by solid performance in its networks business. Investors welcomed the earnings beat and restructuring efforts despite management warning that higher component costs could pressure margins.
- Penske Automotive Group (PAG) +9%: Shares advanced sharply in early trading, standing out as one of Thursday's biggest gainers. The move came as investors rotated toward selected consumer and industrial companies while technology stocks remained under pressure.
- CoreWeave (CRWV) -8%: Shares extended Wednesday's 15% plunge as investors questioned the AI cloud provider's debt-heavy business model and growing financing costs. The selloff reflects concerns about whether rapidly expanding infrastructure companies can generate enough cash flow to support their enormous investment commitments.
- Taiwan Semiconductor Manufacturing (TSM) -2%: Shares declined despite the world's leading contract chipmaker reporting record third-quarter profits and beating Wall Street expectations. Strong AI chip demand wasn't enough to offset the broader semiconductor selloff as investors reassessed valuations and infrastructure spending.
- Charles Schwab (SCHW) -4.5%: Shares slipped despite the brokerage reporting better-than-expected earnings. Investors remained cautious about the financial sector's outlook as volatile interest rates and changing market conditions complicated expectations for future profitability.
Treasury Yields Plunge as Investors Seek Safety
The bond market delivered one of Thursday's biggest moves as investors shifted away from riskier technology stocks and into U.S. Treasury. The 10-year Treasury yield fell as much as 14 basis points to around 5.05%, while the 30-year yield retreated toward 5.43%.
The sharp reversal followed weeks of rising yields that had pressured stock valuations and borrowing costs. Although falling yields typically support equities, Thursday's decline also reflected growing concerns that the AI investment boom could be losing momentum.
AI Financing Fears Overshadow Strong Chip Earnings
The semiconductor sector remained under intense pressure after South Korea's KOSPI plunged roughly 7% overnight. The Philadelphia Semiconductor Index was also on track for an eighth consecutive decline, potentially its longest losing streak since October 2008.
Concerns have shifted beyond chip demand to the enormous costs of building AI infrastructure. Investors are increasingly questioning whether heavily indebted data center operators can sustain expansion as financing costs remain elevated. Taiwan Semiconductor's record earnings offered evidence that demand for advanced chips remains strong, but the market's negative reaction highlighted how sensitive AI stocks have become to valuation and spending concerns.
Hot Wholesale Inflation Adds to Fed Uncertainty
Thursday's economic data delivered another inflation warning, with September's Producer Price Index rising at its fastest pace since 2022. The report followed Wednesday's hotter-than-expected consumer inflation figures, reinforcing concerns that price pressures remain difficult to contain.
The inflation backdrop complicates the Federal Reserve's next interest rate decision, particularly as elevated energy costs continue feeding into the broader economy. Meanwhile, investors rotated toward defensive sectors. Healthcare stocks climbed to fresh highs, while consumer staples continued their strong October performance as investors sought businesses considered more resilient during periods of market volatility.
Looking Ahead
Wall Street will be watching whether the retreat in Treasury yields can stabilize technology stocks and bring buyers back into the semiconductor sector. Investors will also be looking for signs that AI infrastructure companies can finance their ambitious expansion plans without putting excessive pressure on their balance sheets. With inflation running hotter than expected and corporate earnings delivering mixed reactions, the market's next move may depend on whether strong business fundamentals can overcome growing concerns about borrowing costs and the sustainability of the AI boom.
