Wall Street Closes Lower as 10-Year Bond Yields Hit 22-Year High of 5.36%
Wall Street closed lower as 10-year bond yields hit a 22-year high of 5.36%, though AI infrastructure stocks and strong memory chip makers bucked the trend to limit losses across major indices.
Wall Street closed lower overnight, but amidst the volatile trading, a group of stocks managed to buck the trend. Energy companies benefiting from the construction of data centers and memory manufacturers strengthened, while small caps and rate-sensitive stocks faced pressure. Simultaneously, investment houses published a series of new recommendations.
AI Infrastructure and Chip Stocks Gain Ground
Stocks related to artificial intelligence infrastructure and chips emerged as one of the bright spots during the trading day on Wall Street. NRG Energy and Vistra strengthened against the backdrop of the data center construction boom, alongside gains for SanDisk and Micron Technology.
The performance of the four stocks helped indices narrow their losses. At the closing bell, the Dow Jones shed 0.7%, while the S&P 500 and Nasdaq dropped 0.2% each.
Bond Yields Weigh on Small Caps
On the other side of the market, companies more sensitive to financing costs stood out. The Russell 2000 index, which tracks small-cap stocks, came under pressure following a surge in bond yields. During the day, the index approached correction territory.
Another stock that drew attention was Webull. The trading platform's shares plunged after a bipartisan congressional committee published a report claiming the company has deep ties to the Chinese government, which the committee views as a national security threat to the U.S. financial system. The company stated that the report contains inaccuracies.
Analyst Ratings and Price Targets
Alongside the trading action, investment houses provided investors with several additional names to watch. UBS initiated coverage of Invesco with a "buy" rating and set a price target of $41, reflecting an upside of about 26% compared to yesterday's closing price. The bank estimates that the market is not fully pricing in the company's long-term growth strategy.
UBS initiated coverage of Invesco with a "buy" rating and set a price target of $41, reflecting an upside of about 26% compared to yesterday's closing price.
At the same time, UBS downgraded AppFolio from "buy" to "neutral," even as it raised its price target from $200 to $220. The shift came after the company's stock surged 40% since hitting a low in June.
Coinbase Global also received a significant update. Barclays raised its price target for the stock from $95 to $149, but maintained an "underweight" rating. The bank pointed to improved trading volumes in the third quarter, alongside financial forecasts for 2026 and beyond that remain significantly below Wall Street consensus expectations.
Allstate received a tailwind from HSBC, which upgraded the stock from "hold" to "buy" and gave it a price target of $266. The price target reflects an upside of about 18% compared to Monday's closing price. The bank believes that concerns over AI-based price comparison tools harming the insurance company's business are exaggerated.
The pressure on the stock market stemmed primarily from the surge in bond yields. The 10-year yield climbed during the day to 5.36%, a 22-year high, before pulling back following a government bond auction that drew strong demand. The drop in yields allowed indices to recover from the sharp sell-offs at the start of trading, but it was not enough to push them into positive territory.
