Wall Street Rebounds as Bond Rout Pauses and Dell Soars on AI Demand
U.S. stocks snapped a three-day losing streak on Wednesday as surging oil prices and Treasury yields took a breather. The S&P 500 rose 0.5% to close at 7,667.80, the Nasdaq Composite advanced 0.5% to 26,217.83, and the Dow Jones Industrial Average climbed 0.6% to 53,061.51. Ten of eleven S&P 500 sectors finished higher, led by a 1.5% advance in materials and a 1% gain in communications services. Real estate was the lone decliner, shedding 0.8%.
Dell Technologies was the star of the session, surging almost 16% after blowing past quarterly earnings estimates on soaring AI server demand. Chief Operating Officer Jeff Clarke said the AI server business booked an all-time high $60.9 billion in orders, brought in $16.4 billion in revenue, and exited the quarter with a record $95 billion backlog. Nvidia rose 3.2% after Bloomberg reported the chipmaker was in advanced talks to acquire Hugging Face, the dominant open-source AI platform, for approximately $14 billion. Baird reaffirmed Nvidia as one of its top large-cap ideas, citing continued AI compute leadership.
After the bell, Broadcom disappointed with fourth-quarter revenue guidance of $34.8 billion, below the $35.05 billion consensus, raising concerns about intensifying competition in custom AI processors from the likes of Marvell. Third-quarter AI chip sales had more than tripled to $16.7 billion, but investors are increasingly focused on whether hypescalers will diversify their custom-chip suppliers. Microsoft disclosed Azure quarterly revenue of $29.4 billion for the first time, placing it behind AWS ($42.2 billion) but ahead of Google Cloud ($24.8 billion), as CEO Satya Nadella said AI is “blurring the boundaries between our products and reshaping our business models.”
Yen Leaps on BOJ Hawk Talk as U.S.–Iran Strikes Escalate
The Japanese yen rallied as much as 1.2% to ¥158.22 per dollar on Wednesday — its biggest single-day move since the joint U.S.-Japanese intervention a month ago — briefly stoking speculation that officials were conducting “rate checks” with banks, often a precursor to direct intervention. BOJ board member Hajime Takata reinforced hawkish expectations by floating the possibility of outsize or back-to-back interest rate hikes, saying a 25-basis-point move “is not necessarily set in stone.”
The yen’s strength comes after a month in which Japan spent a record $96.4 billion to support the currency following its slide to a four-decade low near ¥164. Nathan Thooft at Manulife Investment Management said the move “shows how sensitive positioning has become — the market got the message that the authorities want a stronger yen.” Overnight index swaps now fully price a rate hike at the BOJ’s September 17–18 meeting, with Governor Ueda having signalled officials will decide policy with upside price risks in mind.
The wider geopolitical dimension is hard to ignore. U.S. Treasury Secretary Scott Bessent has publicly pressured the BOJ to “do the right thing,” met Governor Ueda at the G20 in North Carolina, and defended the joint yen-buying intervention as necessary to prevent extreme volatility from feeding into higher U.S. interest rates. Ayako Fujita, chief Japan economist at JPMorgan Securities, warned: “After the US spoke this much, I think it would be problematic if the BOJ fails to act. But if the BOJ is perceived as being unable to raise rates without a tailwind from the US, that causes a big risk regarding the effectiveness of a rate hike.”
Any failure to hike would surprise traders, send the yen tumbling, and boost inflation already heading toward 3%. Yet simply raising by 25bp may offer little bang for the buck given the hawkish rhetoric. Japan’s 10-year yield has already hit 3.015% — its highest since 1996. JPMorgan’s Fujita notes: “What’s essentially needed to slow down both the weak yen and the rise in long-term interest rates is a credible fiscal message from the government.”
Meanwhile, renewed U.S.-Iran military strikes escalated to their most serious level since July. U.S. Central Command completed a new wave of attacks against IRGC targets including air defence sites, radar systems, and communications facilities. Iran retaliated by hitting Camp Titin, a U.S. Marine base in Jordan, with ballistic missiles. Two Saudi supertankers carrying approximately 2 million barrels each were hit by unidentified projectiles while transiting the Strait of Hormuz on Monday, further raising supply disruption fears. President Trump, characteristically, floated renaming the Strait of Hormuz “Trump Strait.”
Oil Holds Above $90, Gold Surges, and the Bond Sell-Off Takes a Breather
Oil prices steadied near six-week highs on Wednesday after logging nearly 5% gains in the previous session on the escalating U.S.-Iran confrontation. WTI crude settled at $90.33 a barrel (+0.1%), while Brent crude for November delivery eased slightly to $95.04 (+0.4%) after earlier touching $97.04. Benchmark crude is now up 25% in less than a month and over 40% year-on-year. Iranian crude exports have been decimated, falling to 220,000–255,000 barrels per day in August from roughly 2 million bpd in March, according to Reuters. ING analysts warned: “Rising tensions clearly put Strait of Hormuz crossings at risk.”
Spot gold surged 1.4% to $4,388.92 an ounce as safe-haven demand intensified amid the geopolitical uncertainty and bond market volatility. The Bloomberg Dollar Spot Index fell 0.2%, while Bitcoin was little changed at $77,430. The relentless global bond rout paused on Wednesday after pushing sovereign yields to multi-year highs across the board on Tuesday. The U.S. 10-year yield eased 2 basis points to 4.78%, having touched its highest since November 2023. Japan’s 10-year JGB yield hit 3.015% for the first time since 1996. Germany’s 10-year reached levels unseen since 2011, and the UK 10-year gilt touched its highest since 2007.
BlackRock’s Investment Institute said: “Sticky inflation, heavy government borrowing and growing private investment needs give little reason for pressure on yields to fade.” Anthony Saglimbene at Ameriprise flagged the 5% 10-year yield as a “psychological level that could be a go-to excuse for traders and investors to de-risk.”
“One argument is that the rise in bond yields is not bad news, but good news, because it is a logical result of healthy economic growth rates, especially in nominal terms. It may also represent a return to normality after the crazy days of the 2010s and early 2020s, when headline interest rates and benchmark bond yields were near zero,” said Russ Mould, investment director at AJ Bell. “Higher interest rates and bond yields in themselves do not necessarily spell the end of an equity bull run.”
Weak Hiring Data Clouds the Outlook Ahead of Friday’s Payrolls
U.S. labour market data released on Wednesday added a note of caution ahead of Friday’s closely watched nonfarm payrolls report. ADP’s private employment survey showed just 38,000 jobs added in August, below the 47,000 consensus and marking the slowest pace of job creation since January. The prior day’s JOLTS report had shown hiring fell by 278,000 even as job openings rose by 89,000 in July, painting a picture of employers who are posting roles but not filling them.
Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, said the soft ADP report “highlights downside risk to the government’s August jobs report” and forecast a below-consensus 25,000 drop in payrolls on Friday. He added that the unemployment rate is forecast to hold at 4.1% as the labour force contracts — down 1.3 million workers in the twelve months through July as more older workers retire and fewer graduates and immigrants take their place.
The data leaves the Fed in a difficult position. Markets are pricing a 62.3% probability of a quarter-point hike later this month, down from 67.2% the previous day. Fed Bank of New York President John Williams told CNBC there’s evidence inflation continues to ease as the impact of tariffs fades, though higher energy prices are not spreading to other services. Krishna Guha at Evercore noted: “His comments by no means rule out a September hike, but they challenge the market view that a September rate hike is clearly odds-on.”
The S&P 500’s forward P/E ratio stands at 19.7, down from 22.2 at the start of 2026, partly reflecting rising yields. But it remains well above the long-term average of 16. “If you start to see a pretty sharp backup in rates, that can really severely punish the forward multiple,” said Matt Stucky at Northwestern Mutual Wealth Management. “People start to question the sustainability of earnings growth in a tighter monetary environment.” The 10-year last reached 5% in October 2023, a period that coincided with broad stock weakness.
The ASX is set to open 0.4% higher at around 8,979 on the ASX 200. BHP, Coles, Woodside, Amcor, Ramsay and NIB Holdings are among dozens of companies trading ex-dividend today, which will likely weigh on headline index performance. The Australian dollar is steady at US71.67¢. HSBC has shifted to forecasting back-to-back RBA rate rises starting this month, joining the hawkish camp after hot inflation and stronger-than-expected economic growth.
- ASX Ex-Dividend Day — BHP, Coles, Woodside and dozens more trade ex-dividend, creating a mechanical drag on the index that could offset the positive lead from Wall Street.
- Japan, Euro Zone, UK & US Services PMIs (August) — A global sweep of services sector health; watch for any divergence between the U.S. and Europe that could widen the rate differential further.
- U.S. ISM Services (August) — The key U.S. services gauge; a strong reading would bolster the case for a September Fed hike and could push yields higher again.
- U.S. Weekly Jobless Claims — Another piece of the labour puzzle ahead of Friday’s payrolls. Markets are looking for any sign of softening.
- Fed Speakers: Waller, Hammack, Goolsbee — Three Fed officials on the calendar; Governor Waller’s remarks will be watched closely for any shift in the September hike calculus.
- Euro Zone Producer Prices (July) — Input cost pressures in Europe; a hot reading would add to the global inflation narrative driving bond yields higher.