Fed Gathers with Yields and Oil Up, Stocks Down

Published as of: September 15, 2026, 9:12 a.m. ET

(Tuesday market open) Stocks slipped after the 10-year Treasury note yield climbed above 5.04% earlier today, the highest level since 2007. Oil also continued its relentless ascent. The Federal Reserve gathers today ahead of a decision tomorrow afternoon, with odds of a rate hike now at 92%, according to the CME FedWatch Tool.

After yesterday's 5% plunge in chips on concerns of an AI slowdown, OpenAI CEO Sam Altman and Salesforce CEO Marc Benioff are scheduled for a discussion at the Salesforce (CRM) Dreamforce Conference on the future of technology. It might get a close look considering renewed concerns about AI safety and calls for regulation. In addition, Treasury Secretary Scott Bessent testifies before Congress, where he might field questions on rising yields, inflation trends, and energy prices.

On Monday, major indexes fell for the fifth session in the last six on surging oil, the drag from AI, and rate hike expectations. "When we think about the main drivers of inflation—tariffs, energy, and AI capex—none have slowed materially," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research (SCFR). "All of that adds up to strong headwinds for inflation returning to 2%, and thus a Fed that is increasingly looking like it has to hike."

1. Sector leaders pondered if AI spending slows: AI spending has been the main tailwind for tech and the broader economy over the last four years. If it slows, effects could go well beyond the big AI stocks, hitting any firms involved in the data center buildout, from miners extracting copper to construction companies building the actual data centers.  It also raises a near-term question for the market about which sector or sectors might take the baton if tech hands it back. Recently, there'd been sector rotation into energy and away from leaders like healthcare and financials. Even so, the latter two had been ascendant for some time. With market breadth dwindling, there's not necessarily a lot to fall back on. Also, market dispersion eased over the last few weeks, meaning there's less churn under the surface. This could set the indexes up for sharp losses if selling picks up, because such selling might be across the board rather than only in certain stocks. In recent months, when dispersion was high and many stocks traded up even on downturns for the market, indexes weren't clipped as hard by selling pressure.
    
2. 5% no laughing matter, but not Armageddon: The 10-year Treasury note yield hit 5% on Monday for the first time since late 2023. It hasn't closed above 5% since 2007. Higher yields raise borrowing costs and make home buying tougher, though 5% is historically around average. It seems high to those accustomed to near-zero rates for a decade after the financial crisis of 2008 and after Covid. The 5% mark is also roughly where yields were around the time of the internet collapse 26 years ago, but the 5% yields didn't cause that sell-off. Yields had been falling from even higher levels, meaning the internet rally occurred with yields generally above where they are now. That's a reminder that there's nothing particularly spooky about current levels. Also, yields haven't dented the labor market in a material way. "Treasury yields might not be a problem that needs to be fixed," said Collin Martin, head of fixed income research at SCFR. "They are indicative of the economic environment we're in," he explained, noting that nominal economic growth has remained robust and inflation remains well above the Fed's 2% target.
    
3. Non-AI, Fed and oil events to watch: Beyond oil, U.S. rates, and AI, the Bank of Japan meets later this week and analysts expect a hike. Rising rates in Japan can be bearish for U.S. assets, sparking concern that the "yen carry" trade might break down. U.S. August retail sales bow at 8:30 a.m. ET tomorrow. Analysts expect a solid 0.9% monthly increase, Briefing.com said, but that's off a sharp decline of 0.6% in July. The control group of retail sales, which excludes gasoline and a few other items, might be the number to watch. It feeds into gross domestic product and fell 0.4% in July. Another key report is Wednesday's monthly Treasury International Capital release, showing how much money foreign investors and governments invested or removed from U.S. assets. Friday is "triple witching day" when options expire for various traded products, meaning possible volatility as funds shift positions.

• AI infrastructure and chip stocks rebounded slightly this morning, led by Intel (INTC), Lumentum (LITE), Applied Materials (AMAT), and ASML (ASML). The leader of the pack was ASML, up 3%. Fresh news appeared scarce, so the comeback might be technical in nature.
   
• Circle Internet Group (CRCL), Coinbase (COIN), and Strategy (MSTR) all fell 3% to 5% early as bitcoin descended 2.5%. The crypto sector rose Monday on anticipation of today's scheduled Senate procedural vote on the Clarity Act, which would establish a new regulatory framework for cryptocurrencies and other digital assets. Passage of the legislation is "a tight call," Barron's reported.
   
• Dave and Buster's Entertainment (PLAY) plunged 14% in early trading after reporting a quarterly loss amid declining entertainment sales.
   
• Etsy (ETSY) climbed 4% early after getting an upgrade from Oppenheimer to outperform from perform. The firm cited the company's AI search benefits, product improvements, and app engagement.
   
• Enova International (ENVA) crumbed nearly 18% after announcing it withdrew its application related to the proposed $369 million acquisition of Grasshopper Bancorp.
   
• Bank of America (BAC) fell 5% Monday after its CEO said investment banking fees will likely fall by more than 10% from a year ago this quarter, Barron's reported. The bad news hurt shares of other investment banks like Citigroup (C), Goldman Sachs (GS) and JPMorgan Chase (JPM), as well.
   
• Software stocks, which fell earlier this year on fears of AI competition, performed well Monday. Gainers included ServiceNow (NOW), Adobe (ADBE), Palantir (PLTR), and Salesforce.
   
• The Cboe Volatility Index (VIX) rallied nearly 8% to 17.10 by late Monday as participants hedged against possible equity market risk.
   
• The September Empire State Manufacturing index came in at 7.6, below Briefing.com consensus of 14.1 and down from the prior 20.6.
   
• Technically, key support of 7,600 near the 50-day moving average for the S&P 500 Index held on another early test Monday. Support below that is near 7,490. On a negative note, major indexes lost significant ground in the final minutes yesterday, possibly setting up follow-through selling this morning.

Reconsidering Europe: European stocks could draw support from improved European earnings, less demanding valuations, a cyclically oriented market benefitting from global growth, and Germany's infrastructure and defense spending push, Schwab explained in an article on international investing.

LPGA commissioner chats with Schwab: In the new episode of "Invested in the Game," Mason Reed sat down with LPGA Commissioner Craig Kessler to discuss his first 14 months leading the tour and his ambitious vision for its future.

More than a few stocks that enjoyed a sharp boost over the last two years from AI are now struggling. These include GE Vernova (GEV—candlesticks), Intel (INTC—purple line), and Corning (GLW—blue line). They all remain up dramatically over the full two years but have descended sharply from mid-year highs as worries grow about the AI buildout.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

September 16: Fed rate decision and expected earnings from Lennar (LEN).
September 17: August housing starts and building permits.
September 18: Bank of Japan rate decision, August industrial production, and Conference Board August leading indicators.
September 21: No major earnings or data expected.
September 22: Earnings expected from AutoZone (AZO) and KB Home (KBH).