Market Close — Yields Rise, Stocks Slip as Strong Data Tempers Rate-Cut Hopes

U.S. stocks fell Thursday after a sturdier-than-expected batch of economic data pushed Treasury yields higher and cooled expectations for rapid Federal Reserve easing. The Dow dropped 173.96 points, or 0.38%, to 45,947.3. The S&P 500 lost 33.17 (-0.50%) to 6,604.80, while the Nasdaq Composite declined 113.16 (-0.50%) to 22,384.7.

The macro tone turned firmer after August durable-goods orders rose 2.9%, reversing July’s decline and beating forecasts for a drop. Initial jobless claims eased to 218,000, and the final read on Q2 GDP was revised up to 3.8% with slightly hotter deflators—an economic mix that AINVEST said “tilts [the Fed] debate toward patience” and helped send yields higher across maturities. Equities, particularly long-duration corners that lean on multiple expansion, struggled against that rate backdrop.

Policy and trade were in focus as well. J.P. Morgan Global Research estimates the first-year hit from the U.S. auto-tariff regime at $41 billion, with Ryan Brinkman noting: “For the most part, we see automakers and consumers paying the year one $41 billion tab.” That cost burden, alongside low-single-digit sticker-price increases, could pressure discretionary spending just as financing costs remain elevated. At the same time, Jose Asumendi said a prospective 15% tariff on EU autos is “a manageable year-over-year increase of 12.5%… [that] can be mitigated” via localization and other steps—tempering fears of an immediate shock to supply chains.

Energy and power-demand themes added cross-currents. Crude oil settled modestly higher near $65.21, while gold firmed to $3,786, a reminder that haven demand can coexist with rate volatility late in the cycle. Looking ahead, Citi Research projects a structural lift in electricity consumption consumption as AI-led data centers and industrial load expand, writing: “Citi Research estimates U.S. power demand will grow at a 2.8% compound annual growth rate over the next 15 years.” That long-run demand story feeds into utilities, grid equipment makers and natural-gas generation—even as higher near-term yields keep overall financial conditions tight.

Bottom line: Thursday’s tape reflected “good economy, tougher rates” dynamics highlighted in the morning’s data wrap. Until inflation cools decisively—or earnings re-accelerate enough to offset the duration drag—higher yields are likely to cap index-level upside, leaving a stock-pickers’ market into quarter-end.