Communication Services Leads While S&P 500 Finishes Flat

Rotation was the clearest signal coming out of Thursday's session, with Communication Services climbing to the top of the sector leaderboard while Materials dropped to the bottom of the pack. The split wasn't confined to one corner of the market either. Traditionally defensive names like Utilities and Consumer Staples also lagged, which suggests the moves may have had less to do with growth versus safety and more to do with which sectors could stomach the bond market's latest lurch higher in yields.

The headline indexes were little changed by the late-session snapshot, but that calm surface masked a lot of churning underneath. The Dow Jones fell for a third straight session as Treasury yields sitting at multidecade highs kept weighing on the market's more cyclical corners, CNBC reported. The S&P 500 and Nasdaq Composite essentially treaded water, while the Russell 2000 slipped again as small caps continued to feel the brunt of the bond selloff.

Market Scorecard

Data timing: 2026-09-24 session; snapshot retrieved Sep 24, 2026, 4:02 PM EDT. Prepared Sep 24, 4:09 PM EDT. Sources: Yahoo Finance via yfinance (indexes and sector ETFs), U.S. Treasury Daily Par Yield Curve Rates, Yahoo Finance point-in-time crypto observations. Crypto values are timestamped point-in-time observations.

The broad indexes barely moved, but that flatness came after the Dow logged its third losing session in a row, according to CNBC. Small caps kept lagging large caps too, a pattern that has been building through September as bond yields grind higher.

Sector Performance

Communication Services and Health Care led the sector table, and Energy also stayed in the green as crude prices kept climbing with Middle East tensions unresolved, CNBC reported. Those were the only three sectors on the positive side of the ledger. Materials brought up the rear, and it wasn't alone: Utilities and Consumer Staples, sectors that usually get bid up when investors want safety, fell right alongside the cyclical names.

That pattern suggests this wasn't a simple growth-versus-defense split. It looked more like a market pressuring anything sensitive to where bond yields are headed next, regardless of label.

Bonds Set the Tone

The bond market was doing most of the talking on Thursday. The 30-year Treasury yield touched its highest level since 2004, and the 10-year note climbed to near levels last seen in 2007, CNBC reported. That backdrop appeared to hit small caps especially hard.

CNBC reported that the correlation between small caps and the price of the 10-year note touched a one-year high last week, and that the current correlation between the Russell 2000 ETF and long-dated Treasury bonds sits well above the comparable readings for large-cap ETFs. "Small caps have had a more difficult time adjusting to the Fed's hawkish turn and continued increase in rates at the long end," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, per CNBC.

Fed Voices Split on What Comes Next

Fed officials themselves sounded split on how much further tightening is needed. New York Fed President John Williams said it's "reasonable" to expect another hike by year-end but cautioned against locking into a pre-set forward guidance path, CNBC reported. Philadelphia Fed President Anna Paulson also indicated additional tightening is likely but characterized any further moves as "modest."

Not everyone thinks the market has this right either. Citigroup economist Andrew Hollenhorst wrote that the rise in yields has come in real yields as investors priced in the Fed setting higher policy rates, rather than reflecting expectations of a too-dovish Fed letting inflation persistently exceed target, per CNBC's reporting. Given the mixed signals, another Fed rate hike remains a meaningful possibility, with futures pricing pointing to elevated odds of an October move, but the timing and size of any additional steps stayed genuinely uncertain heading into the weekend.

Oil added its own pressure to the mix. Both Brent crude and WTI extended their climb as tensions in the Middle East stayed unresolved, CNBC reported, even as stocks came off session lows after Reuters, citing sources, reported that U.S. and Iranian negotiators in New York were considering a deal that would bring a phased end to the conflict, with Iran reopening the Strait of Hormuz. That kind of headline risk may help explain why Energy held up better than most cyclical sectors while Materials lagged.

Looking Ahead: Next Trading Day

Friday brings a double dose of high-impact data with the final read on second-quarter GDP and the August PCE price index, the Fed's preferred inflation gauge. Given how sensitive Thursday's tape was to yield moves, a hotter-than-expected PCE print could feed the same rate-hike anxiety that pressured small caps and cyclical sectors this week. A cooler print, on the other hand, could take some pressure off the tightening narrative, though one release is unlikely to settle the debate on its own.

Traders will likely watch bond yields as closely as the headline numbers themselves, since it's the reaction at the long end that has been setting the tone for stocks lately.