U.S. 10-Year Yield Hits 5.342% Before Easing; New York Stocks End Slightly Higher as Chip Shares Rally

New York stocks closed slightly higher on October 1 after U.S. Treasury yields pulled back from an intraday surge to their highest level since 2002. Semiconductor shares showed relative strength after upbeat results from Micron.

The Dow Jones Industrial Average rose 20.51 points, or 0.04%, to 50,926.56 on the New York Stock Exchange. The S&P 500 gained 14.91 points, or 0.19%, to 7,666.45, while the Nasdaq Composite added 10.53 points, or 0.04%, to 26,871.60.

The key driver for the market was the Treasury market. The benchmark 10-year U.S. Treasury yield climbed as high as 5.342% during the session, reaching its highest level since 2002. Yields on government bonds in major European markets, including the U.K. and France, also rose, adding to selling pressure on risk assets earlier in the day.

The tone shifted in the afternoon as buying returned to the bond market. Growing views that the recent rise in yields had been excessive in the short term, along with a U.S. Treasury buyback, helped calm market nerves.

The U.S. Treasury said it received $46.39 billion in offers in a buyback operation for bonds with maturities of 10 to 20 years. It purchased $6 billion of that amount.

Worries about additional Federal Reserve rate hikes also eased somewhat. CME FedWatch showed that the federal funds futures market priced in a 74.0% chance the Fed would keep rates unchanged in October, up from 62.4% a day earlier.

Semiconductor stocks were among the strongest performers, led by Micron. The Philadelphia Semiconductor Index rose 1.59%. Micron gained 3.03%, SanDisk climbed 2.75%, Nvidia advanced 1.09%, and TSMC added 0.66%. American depositary receipts of SK Hynix also jumped more than 5%.

Micron's second-quarter revenue and its revenue outlook for the next quarter both topped market expectations, helping fuel buying across the broader chip sector.

International oil prices surged on supply concerns. News that China had halted exports of petroleum products and the possibility of additional U.S. troop deployments to the Middle East lifted prices.

On ICE Futures Europe, December Brent crude settled at $102.31 a barrel, up 4.37% from the previous session. On the New York Mercantile Exchange, November West Texas Intermediate crude rose 2.71% to $92.87 a barrel.