U.S. Stocks Retreat as Brent Crude Tops $105 and Yields Near 5.3%

U.S. stocks retreated for a second session Thursday as Brent crude climbed above $105 a barrel and the 10-year Treasury yield held near 5.3%, adding pressure to a rally led by technology shares.

Brent crude reached $105.54 a barrel on Oct. 8. The 10-year Treasury yield moved between 5.27% and 5.35% during the U.S. session, remaining near its highest level since 2002.

The S&P 500 closed at 7,818.93 on Oct. 6 after reaching a record close. The Nasdaq Composite ended that session at 27,599.79, while the Dow Jones Industrial Average closed at 51,521.28.

The market retreated as yields and oil prices moved higher. Higher Treasury yields can increase borrowing costs and reduce the valuations investors assign to stocks. Rising oil prices can also raise costs for companies and consumers.

Recent gains have been concentrated in technology stocks, while corporate earnings expectations have helped offset pressure from higher rates and energy costs. Third-quarter S&P 500 earnings are projected to increase 29.5% from a year earlier, marking a third consecutive quarter of growth above 25%. Revenue is projected to rise 12.3%.

Analysts raised third-quarter earnings estimates by 1.4% between June 30 and Sept. 30. That compares with an average decline of 2.2% during the quarter over the previous five years. Of 116 S&P 500 companies that issued earnings guidance, 72, or 62%, provided positive guidance.

The labor market presents a mixed backdrop. The unemployment rate held at 4.2% in September, while nonfarm payroll employment increased by 29,000.

Brent settled at $100.58 a barrel on Oct. 6, up 0.3% from the prior session, before rising above $105 two days later. The latest move in oil prices and Treasury yields is testing whether projected earnings growth can continue to support equity valuations.