The benchmark S&P 500 slipped 0.6% to close at 7,592.12 points, the tech-heavy NASDAQ Composite dropped 0.7% to settle at 26,081.73 points, and the blue-chip Dow Jones Industrial Average shed 0.6% to conclude at 52,064.46 points

U.S. stocks ended lower on Thursday while Treasury yields surged, after a producer inflation report showed an acceleration in headline figures in August, prompting traders to add to bets for a central bank rate hike next week. Higher oil prices also weighed on sentiment.

The benchmark S&P 500 slipped 0.6% to close at 7,592.12 points, the tech-heavy NASDAQ Composite dropped 0.7% to settle at 26,081.73 points, and the blue-chip Dow Jones Industrial Average shed 0.6% to conclude at 52,064.46 points.

Since posting an all-time high in mid-August and eking out gains for that month, stock market has struggled as the focus has moved from earnings strength to a muddled macro picture. The S&P is now 2.7% below its record close.

The spotlight on Thursday was on the August U.S. producer price index (PPI) report.

The PPI report comes a day ahead of the more closely-watched consumer price index (CPI) data, and comes just days after a blockbuster August nonfarm payrolls report.

Those expectations were reflected in central bank interest rate odds. As per the CME FedWatch tool, the probability of a quarter-point rate hike by Federal Open Market Committee (FOMC) on September 16 now stood at 73%, up from about 64% before the PPI data.

U.S. Treasury yields also moved higher after PPI, as bonds were dumped. The benchmark 10-year yield was last up 12.4 basis points to 4.961%, its highest level since October 2023. The shorter-end, more rate-sensitive 2-year yield added 14 basis points to 4.567%, its highest since July 2024.

The bond market had slumped in the previous session as well, after a highly anticipated U.S. Treasury Department buyback update underwhelmed investors.