• US stocks finish mixed as Meta’s Muse rally helps mask the losers.
• Iran’s Pezeshkian wants a deal with the US before the midterm elections, NBC reports
• Meta shares approach all-time highs as the Muse rally begins yet another leg higher
• US treasury sells $44 billion of 7 year notes at a high yield of 5.085%
• US/Iran discussed phasing in a deal to reopen Hormuz and end the US blockade
• Bitcoin trades lower but holds support near the high of a swing area target. What next?
• Trump and Xi meet at the White House: What traders should watch
• Fed’s Anna Paulson says another rate hike may be needed to lower inflation
• US new-home sales for the month of August 0.684 million versus 0.615 million estimate
• BOE’s Breeden: Not at all obvious there is a path to lower energy prices.
• Fed’s Hammack says inflation risks are tilted to the upside
• Adam Button on Gold, Market Noise and Risk | What Traders Need to Know Before Q4
• ECBs Schnabel expected to announce she will be stepping down to join IMF in a senior position
• Canada retail sales for the month of July -0.7% vs -0.8% estimate
• US initial jobless claims 197K vs 201K expected

The dollar closed higher against every major currency Thursday. Treasury yields climbed across the curve, with the 10-year near 5.19%, while European shares finished lower.

U.S. stocks recovered much of their earlier decline after reports that Washington and Tehran had discussed a phased arrangement to reopen the Strait of Hormuz and end the U.S. blockade. Iranian President Masoud Pezeshkian also signaled interest in progress before the U.S. midterm elections. Those are encouraging words for a market watching oil supplies closely. They are not a deal, and the sharp rebound in crude after its initial selloff suggests traders remain unconvinced.

The dollar and Treasury yields

The greenback’s largest gains were against the Japanese yen, Swiss franc and Australian dollar. Its smallest gain was against the euro. Higher U.S. yields helped support the dollar even as the Iran headlines briefly offered some relief to stocks and oil.

Treasury yields in the supplied closing snapshot were near their highs for the day:

• 2-year: 4.916%, up 2.1 basis points
• 5-year: 5.050%, up 4.5 basis points
• 10-year: 5.1915%, up 7.6 basis points
• 30-year: 5.4782%, up 7.6 basis points

The larger rise in longer-term yields kept inflation and borrowing costs in focus. Philadelphia Fed President Anna Paulson said another rate hike may be needed to bring inflation down. Cleveland Fed President Beth Hammack also described inflation risks as tilted to the upside. The Fed has not decided on another hike, but officials are giving bond traders little reason to dismiss the possibility.

A slightly soft 7-year Treasury auction offered little help. The notes sold at 5.085%, 0.7 basis points above the yield indicated before the auction.

U.S. stocks: a recovery, with plenty of weakness underneath

The broader indices climbed off their session lows, but the closing results were mixed:

• Dow industrial average: 51,355.15, down 162.02 points or 0.31%
• S&P 500: 7,704.22, down 1.80 points or 0.02%
• Nasdaq Composite: 26,939.37, up 3.34 points or 0.01%
• Russell 2000: 2,835.58, down 3.08 points or 0.11%
• Nasdaq 100: 30,478.86, up 8.56 points or 0.03%

The near-flat S&P and Nasdaq closes hide a much wider spread among individual stocks. Meta rose 4.50% and Nebius gained 7.44%. Intel, CoreWeave and AMD also finished higher. On the other side, Arm fell 7.88%, while Sandisk and Coherent each lost more than 3%. Chip and AI shares were moving in different directions, even as the Nasdaq index finished little changed.

Europe closed lower

European shares finished down across the major markets in the supplied snapshot:

• Germany’s DAX: 25,266.54, down 0.57%
• France’s CAC 40: 8,081.44, down 0.52%
• U.K.’s FTSE 100: 10,680.00, down 0.24%
• Spain’s IBEX 35: 19,573.39, down 0.30%
• Italy’s FTSE MIB: 51,543.44, down 0.85%

European 10-year yields were mixed on the day but remained near multiyear highs. Germany’s yield rose 2.9 basis points, while the U.K. and Italy saw modest declines. High bond yields continue to make it harder for stocks on both sides of the Atlantic to sustain a rally.

The news behind the moves

U.S. data did little to challenge the higher-yield story. Initial jobless claims came in at 197,000, below the 201,000 estimate. August new-home sales ran at an annualized 684,000, above the 615,000 estimate, although the monthly sales estimate carries a wide margin of error. Together with the Fed comments, the releases kept attention on an economy that remains resilient while inflation is still a concern.

Presidents Trump and Xi also met at the White House. Their public comments were cordial, but traders are still looking for concrete developments on trade, technology and rare earths.

Oil and the Hormuz question

WTI crude was near $95.11, up $2.41 or 2.60% in the supplied snapshot. Oil fell from around $96.78 to $93.30 as traders reacted to the possibility of a phased U.S.–Iran arrangement, then recovered much of that decline. There were also conflicting Iranian messages about the prospects for reopening the strait.

That is the challenge for traders. A headline about talks can move oil quickly. Sustained relief would require visible steps on shipping through Hormuz and the U.S. blockade. Until then, the risk of disrupted supply remains in the price. My earlier post on the phased proposal explains the difficult question of which side gives up leverage first.

Gold, silver and Bitcoin

Gold was near $4,274, down $12.85 or 0.30%. Silver traded near $63.79, down $0.65 or 1.00%. A stronger dollar and higher Treasury yields were headwinds for both metals: investors can earn more from bonds, while dollar-priced metals become more expensive for buyers using other currencies.

Bitcoin was near $84,378, little changed on the day after recovering from an earlier drop. It did not follow the late stock-market rebound with much conviction, but one quiet close is not enough to draw a broader conclusion about its relationship with equities.

The next session starts with the same questions: Can the U.S. and Iran turn talk into a workable shipping arrangement? Will oil stay elevated? And how much further can yields rise before they put renewed pressure on stocks? Today’s index recovery showed that buyers are still there. The dollar, bond market and weak stock breadth showed they still have work to do.

This article was written by Greg Michalowski at investinglive.com.