Dismal bond performance that sank stocks yesterday spilled into Thursday, offering no relief to investors exhausted by months of steadily rising yields. Stocks fell early as yields kept climbing, stirred by weak debt auction demand, heavy borrowing, and rising oil, among other factors.

Wednesday's September S&P Global U.S. Manufacturing PMI headline helped instigate the Treasury sell-off, topping expectations. Renewed Treasury weakness followed New York Federal Reserve Chief John Williams saying the Fed would likely need to hike again this year. Several more Fed speakers are scheduled today. Yields—which move the opposite direction of Treasuries—threaten to overshadow today's meeting between U.S. President Trump and Chinese President Xi and raise the importance of next week's heavy U.S. data schedule.

Selling hit 10 of 11 S&P 500 sectors yesterday. Market breadth stayed thin, as just 29% of S&P 500 stocks trade above their 50-day moving averages. The 10-year Treasury note yield touched 19-year highs and 30-year yields reached 22-year highs. "I think the bond market is sending a message, but I think it's saying that the economic backdrop remains relatively firm, inflation is still a concern, and interest rates may need to remain higher than investors previously expected," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Global yields have risen as well, so it's not just a U.S. story."

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~5 basis points to 5.162%.

The U.S. Dollar Index ($DXY) is higher by 0.26 at 101.35.

WTI Crude Oil (/CL) October futures are higher by 4.06% to $95.90/barrel.

Gold prices have traded in a range of $4,278.30-4,338.00 and were last seen trading lower by ~0.76% to $4,285.40/oz.

Natural Gas prices for September futures have traded in a range of $2.979-3.181 today and were last seen trading higher by 4.47% to $3.158.

Bitcoin (BTC) is lower by ~0.33% over the last 24 hours to $84,097.65 today.

Shares of Nebius Inc. (NBIS + $18.83 to $245.45) are gapping up this morning after BNP Paribas upgraded the full-stack AI infrastructure services provider to “Outperform” from “Neutral” and hiked their price target on the stock to $399.00 from $260.00. Analysts at BNP Paribus cited the company’s pricing power and capacity ramp, along with strong market demand for compute. Calls are outnumbering puts ~2:1 with the September 25^th 250.00 call seeing the most action from traders (volume is 14,800).

Also trading to the upside this morning is Dollar General Corp. (DG + $2.61 to $123.21) after HSBC upgraded the discount retailer to “Buy” from “Hold” and bumped their price target on the stock to $160.00 from $125.00. HSBC analyst Joseph Thomas said that the company’s recovery is “moving from promise to delivery” and believes DG is on track to deliver comparable sales at the top end of guidance this year. Calls and puts are trading roughly even with the October 16^th 105.00 put being the highest volume contract (volume is 218).

New 52-week highs (35 new highs today): Fortinet Inc. (FTNT + $1.04 to $179.78), Meta Platforms Inc. (META + $23.11 to $767.11), Twilio Inc. (TWLO + $2.84 to $293.54)

Some unusual call activity (~500:1 calls over puts on 25x average daily volume at midday) is being seen in CCC Integrated Solutions Holdings Inc. (CCC + $0.22 to $6.88) as option traders primarily target the December 18^th 7.50 call. Volume on this contract is 12,400 (vs. open interest of 3,800), which mostly consisted of two large block trades – a 7,000 contract block was bought at the ask price of $0.50 and a 3,000 contract block was bought at the ask price of $0.45. We know that the 7,000 contract block is a new position and we can assume the intent is bullish in nature since the trade took place at the ask price.

Shares of Darden Restaurants Inc. (DRI - $3.30 to $210.39) are moving lower this morning after the owner and operator of full-service restaurants reported fiscal Q1 adjusted earnings of $2.05 per share ($0.01 miss) on Q1 revenue that increased 6.56% year-over-year to $3.20B (just below the $3.206B expected). The company reaffirmed its fiscal 2027 (FY27) EPS guidance of $11.10-11.35 versus the $11.27 consensus estimate. Calls and puts are trading roughly even with the October 16^th 220.00 call being the highest volume contract (volume is 584).

Also trading to the downside this morning is Dropbox Inc. (DBX - $1.22 to $33.00) after Citigroup downgraded the communications services provider to “Sell” from “Neutral” and cut their price target on the stock to $29.00 from $33.00. Analysts at Citigroup cited valuation concerns and believe the company’s core file, sync and share business has not established a path to sustained growth. Puts are slightly outnumbering calls with the October 9^th 33.00 put being the highest volume contract (volume is 136).

New 52-week lows (255 new lows today): BWX Technologies Inc. (BWXT - $2.59 to $139.22), Exelon Corp. (EXC - $0.21 to $40.48), Las Vegas Sands Inc. (LVS - $0.94 to $38.25)

Some unusual put activity (~40:1 puts over calls) is being seen in Flagstar Bank Inc. (FLG + $0.09 to $12.39) which is primarily being driven by a 10,000 contract block that was bought on the March 2027 11.00 put at the ask price of $0.45 (open interest is 1). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bearish in nature since the trade took place at the ask price.

TPG RE Finance Trust Inc. (TRTX - $0.18 to $6.65): Option volume is running at ~208x the daily average on this commercial real estate finance company which is primarily being driven by activity on the January 2027 7.00 put. Volume on this contract is 2,000 versus open interest of 136, so it’s likely that nearly all the volume represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times at the ask prices of $0.85 & $0.90 each, which suggests bearish intent.

LTC Properties Inc. (LTC + $0.76 to $43.30): Option volume is running at ~202x the daily average on this senior living real estate investment trust (REIT) as option traders primarily target the October 16^th 45.00 call. Volume on this contract is 3,176 versus open interest of 134, so we know that the volume primarily represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $0.25-$0.40 each, which suggests bullish intent.

Evercore Inc. (EVR - $3.69 to $256.20): Option volume is running at ~5x the daily average on this building materials provider which is primarily being driven by a 2,000 contract block that was bought on the October 16^th 280.00 call for $2.25 when the bid/ask spread was $1.25 x $2.80 (open interest is 7). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bullish in nature since the trade took place above the midpoint of the bid/ask spread.

The Cboe Volatility Index (VIX + 0.31 to 15.49) has been in positive territory all day today (the intraday range is 15.34-16.57), as equity markets are mixed around the midday mark (DJI - 121, SPX + 10, $COMP + 25, RUT - 4). VIX option volume has been above average today at 576,221 contracts, and calls are outpacing puts better than 2:1 so far today.