US stocks fell on Wednesday morning as Treasury yields rose, prompting investor concern as they monitored diplomatic engagements involving the US, Iran, and China. The Dow Jones Industrial Average remained close to unchanged, while the S&P 500 dropped by 0.5% and the Nasdaq Composite decreased by 1%, following back-to-back record highs earlier this week. The 10-year Treasury yield surged above 5% to its highest level since 2007.
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President Trump is set to welcome Chinese President Xi Jinping at Joint Base Andrews, marking Xi's first visit to Washington, D.C., in 11 years. While analysts do not expect significant policy advances, discussions are anticipated to focus on trade, the conflict in Iran, rare earth materials, and artificial intelligence. AI policy is particularly relevant for tech investors after Anthropic CEO Dario Amodei advocated for a measured pace in AI development. Attendees for an upcoming dinner with the two leaders include notable Silicon Valley executives such as Nvidia's Jensen Huang, OpenAI's Sam Altman, and Google's Sundar Pichai.
In the energy sector, oil prices showed little change, reflecting uncertainty around US-Iran relations. President Trump indicated that US and Iranian officials had held discussions at the UN on Tuesday, reviving hopes for a potential truce. Brent crude oil futures traded below $100 per barrel, while West Texas Intermediate crude futures fell below $91.
On the economic front, the expansion of US business activity exceeded expectations in September. The S&P Global manufacturing PMI registered at 57, outperforming forecasts of 53.7. The services sector also outpaced expectations with a reading of 58.7, compared to a predicted 55.8. The composite reading, which reflects both manufacturing and services, stood at 58.4 against a forecast of 55.3.
Turning to earnings, Cracker Barrel Old Country Store reported better-than-expected results, causing its shares to rise by 8%. Meanwhile, investors are expressing renewed interest in quantum computing stocks such as IonQ, Inc. and D-Wave Quantum Inc.
As the market opened, stocks mixed, with the Dow slipping 0.2% and S&P 500 down 0.6%. The rising 10-year Treasury yield added pressure on equities, reflecting increased investor caution. Concerns regarding a new wave of AI disruption also affected stocks in the financial, travel, and insurance sectors.
On corporate strategies, McDonald's announced a focus on artificial intelligence and new menu items to attract customers back from competitors like Burger King. The fast-food chain is set to invest $8.5 billion through 2036, with a significant portion aimed at updating restaurant technology
Oil prices remained below $100 amid speculation regarding a diesel export ban discussed by President Trump. Diesel fuel prices have reached a record average of $6.52 per gallon as of now.