US Market Conditions】All three major indices fall back, long-term interest rates surge on strong PMI – Materials sector drops alone, energy is the only positive …
📊 Major Indices (NY Market Close, Wednesday, September 23)
While the previous day, the 22nd, saw a ‘mixed’ performance where the Nasdaq absorbed losses in financial stocks, the 23rd saw a complete reversal with all three major indices falling back. Amidst continued uncertainty surrounding the conflict between the US and Iran, the rebound in oil prices—which had fallen for four consecutive days—weighed on the stock market. Additionally, the US PMI (Purchasing Managers’ Index) released that day was strong, causing US Treasury yields to surge. The 5-year US Treasury yield hit the 5% range for the first time in 20 years, and the overall rise in long-term interest rates became a clear headwind for stocks.
President Trump revealed that, in conjunction with the UN General Assembly being held in New York, US and Iranian officials held discussions for about three hours, describing it as a ‘very good meeting.’ Special Envoy Witkoff and Mr. Kushner participated in the talks, and further discussions are expected soon. On the other hand, in his UN speech, President Trump also indicated that he is ‘being forced to make a big decision’ regarding whether to aim for an agreement with Iran or to increase military pressure, showing that expectations for diplomatic progress and geopolitical risks continue to intersect. Furthermore, Treasury Secretary Bessent revealed that, in response to rising domestic diesel prices, the US is considering a full or partial ban on diesel exports.
💻 Performance by Sector
Out of 11 sectors, only Energy was positive, a development almost the exact opposite of the previous day, the 22nd. Even amidst the common weight of rapidly rising interest rates, there was a clear difference in the extent of the declines, with sectors that were ‘interest-rate sensitive’ and ‘overbought the previous day’ resulting in the heaviest selling.
🔍 Analysis of the Top Performing Sector: ① Energy (+0.84%)
The only positive sector today. WTI crude oil futures started with a slight rebound and maintained firmness in subsequent trading. For the past few days, oil had fallen for four consecutive days due to expectations of the resumption of operations of Saudi Arabia’s East-West pipeline and the normalization of supply. However, on this day, while it was reported that Iran proposed it was ‘prepared to reopen the Strait of Hormuz within 7 days if the US-led port blockade and military pressure around the strait are eased,’ President Trump himself stated that he is ‘being forced to make a big decision between an agreement with Iran or strengthening military pressure.’ This simultaneously brought awareness to expectations for diplomatic progress and the possibility of military tension, once again intensifying uncertainty regarding geopolitical risks. This uncertainty induced short-covering in oil, which had been continuously sold off while pricing in supply normalization, and energy stocks followed suit, remaining firm. Reports of Treasury Secretary Bessent considering a diesel export ban may have also supported the sector through speculation regarding domestic energy supply and demand.
🔍 Analysis of the Worst Performing Sector: ⑪ Basic Materials (-2.23%)
The worst performing sector today. On the previous day, the 22nd, it was the top sector among all, up 2.33%, primarily due to the sharp rise in gold mining stocks (Newmont +3.42%, Freeport-McMoRan +3.03%), but on this day, it fell to become the worst performing sector. The background to this is the softening of gold prices due to dollar-buying pressure during the surge in US Treasury yields following the strong PMI. Gold started trading in the NY market with ‘a strong dollar as a weight,’ and the reaction to the previous day’s sharp rebound in gold prices weighed heavily on gold mining stocks that had been bought up. With the 5-year Treasury yield hitting the 5% range for the first time in 20 years, the rise in real interest rates is also a factor that relatively lowers the investment appeal of gold (a non-interest-bearing asset), and the sharp drop in the materials sector on this day appears to be the result of two forces overlapping: ‘the reaction to the previous day’ and ‘selling of gold and precious metals due to rising interest rates.’
🏦 Bond Market
In the US Treasury market, yields surged across all maturities. The direct trigger was the US PMI released that day, which was stronger than market expectations, and the 5-year US Treasury yield hit the 5% range for the first time in 20 years, since 2006. The 10-year Treasury yield was also trading at a high level of 4.986% at the start of the NY market, and the 5% threshold is once again being focused on. Amidst persistent speculation of additional rate hikes by the FOMC within the year, strong economic indicators confirmed ‘prolonged monetary tightening,’ which weighed on the stock market, particularly interest-rate sensitive sectors.
🛢️ Crude Oil / 🥇 Gold / 💴 Currency
Crude oil rebounded against the backdrop of uncertainty surrounding tensions between the US and Iran. The downward trend due to expectations of supply normalization paused, and the reassessment of geopolitical risks prompted short-covering.
Gold saw a soft performance under pressure from a stronger dollar and rising interest rates following the strong PMI. The NY market started with ‘a strong dollar as a weight,’ and in a reversal from the previous day’s sharp rebound, the price movement was heavy on the upside.
Currency saw dollar buying prevail following the surge in US Treasury yields, with the dollar-yen rising to the upper 157 yen range. There were moments when it approached 158 yen, and the trend of a rebound market continued. There was little reaction to the drop in oil prices, and the trend is driven by dollar buying conscious of interest rate differentials.
🪙 Cryptocurrency Movements
Following the surge in US Treasury yields and the stronger dollar, it was a day of headwinds for risk assets in general. As the stock market saw all three indices fall back, it is believed that the cryptocurrency market was also in an environment where risk-off pressure was likely to be applied.
🤔 What is the current investor sentiment?
As of the previous day, the 22nd, the VIX index (fear index) was 0.66 points lower at 14.21, meaning caution had actually receded. However, on the 23rd, there was a broad decline following the surge in long-term interest rates, and it is highly likely that investor sentiment has become nervous again. In particular, the fact that ‘overshooting adjustment’ type price movements were prominent, where sectors that were overbought the previous day (materials) were sold off the most, indicates that the market remains in an environment sensitive to interest rate trends.
🇺🇸 Upcoming US Stock Market Schedule (US Dates)
📅 Key Events This Week
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September 24 (Thu): US-China Summit (President Trump and President Xi Jinping), New Home Sales, Initial Jobless Claims, Micron Technology Earnings Announcement
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September 25 (Fri): Durable Goods Orders, University of Michigan Consumer Sentiment Index
Tomorrow, the 24th, will be a critical day that could determine the direction of the market, as it features both the US-China summit and the Micron Technology earnings announcement after the close, which will influence sentiment in the AI and semiconductor sectors. Combined with the movement of long-term interest rates, this is a day not to be missed.
🤞 Looking back at today’s market
In a reversal from the ‘AI/high-tech-led selective buying’ seen until the previous day, today was a ‘total sell-off’ day where almost all sectors were sold off under the common weight of rising interest rates. Symbolically, the materials sector, which was the most bought the previous day led by gold mining stocks, turned into the biggest decliner today. This price action indicates that the market remains in a high-volatility environment where it is easily swayed by short-term themes and prone to significant reactions. The only positive sector, energy, rose not because of relief over supply normalization, but rather driven by ‘anxiety’ over the resurgence of geopolitical risks, so it is not a result to be blindly optimistic about. With key events like tomorrow’s US-China summit and Micron’s earnings ahead, the market is likely to continue searching for a stable footing.
📌 Today’s Summary
A sharp rise in US Treasury yields following strong PMI data (the 5-year yield hit the 5% range for the first time in 20 years) weighed on the entire stock market, causing the NY Dow, S&P 500, and Nasdaq to all fall back. By sector, while energy remained the only positive due to the rebound in crude oil, the materials sector, which had surged the previous day led by gold mining stocks, fell to become the biggest decliner, as the impact of rising interest rates and the reaction to the previous day’s buying converged. Tomorrow’s US-China summit and Micron’s earnings will be a key litmus test for the next market direction.
Source: Minkabu FX/Forex, Zaikei Shimbun, World’s Easiest Investment School, Kokoya Money School, User-provided data (Major indices, finviz by sector), CNN Fear & Greed Index (https://edition.cnn.com/markets/fear-and-greed)
※ This report is for informational purposes only and is not intended as investment advice. Some final closing prices for gold and 10-year Treasury yields are unconfirmed, so descriptions may reflect general trends.