Wall Street absorbed another hit Thursday. Brent jumped 3.4% to $106.60. The 30-year Treasury yield reached its highest level since 2004. October Fed hike odds moved near 70%.

Stocks fell hard early. Then almost all of the loss disappeared. The S&P 500 closed down just 0.02%. The Nasdaq finished up 0.01%. Reports that U.S. and Iranian negotiators were discussing a path to reopen the Strait of Hormuz changed the day.

Thursday, September 24

Thursday came down to three markets. Oil. Bonds. Stocks. Oil surged. Treasury yields rose. Stocks dropped hard.

Then reports of a possible path toward reopening the Strait of Hormuz changed the tone. Crude pulled back from its highs. Stocks came off their lows.

By the close, the S&P 500 was almost flat. The Nasdaq was slightly higher. That reversal mattered. It showed how fast buyers can return when oil supply fears ease.

The biggest bond move came at the long end. The 30-year Treasury yield reached about 5.48%. That was its highest level since 2004. The 10-year climbed near 5.20%.

The 2-year moved near 4.92%. Those are heavy borrowing costs. Mortgages can stay expensive. Companies pay more to issue debt.

And investors can earn more than 5% from long-term government bonds. That makes stocks work harder. The higher yields go, the stronger earnings need to be.

Traders kept raising the chance of another rate increase. October hike odds moved near 70%. They were close to 53% before Wednesday’s hot U.S. data. The Fed already raised rates last week.

Now markets see another 25-basis-point move next month as more likely than not. Firm jobs are one reason. High oil is another. Strong growth is a third. The Fed does not have much reason to rush toward lower rates while those numbers stay strong.

Brent rose $3.52 to $106.60. WTI gained $2.45 to $94.61. Both climbed as much as about 5% earlier in the session. Fresh attacks on Saudi Arabia raised fears that more oil supply could be lost. That pushed crude higher fast.

Then reports of talks aimed at reopening the Strait of Hormuz helped prices pull back from the session highs. That shift helped stocks recover too. Oil still closed sharply higher. But the late pullback showed how much the market is watching every sign of progress around Hormuz.

The market’s recovery was the most important stock signal of the day. The S&P 500 closed down only 0.02%. The Nasdaq finished up 0.01%. The Dow lost 0.31%. That came after a much weaker start.

Oil was higher. Treasury yields were higher. Fed hike odds were higher. Yet the major indexes avoided a deep selloff. That tells us buyers are still willing to step in when one risk starts to ease. Thursday, that risk was oil.

The Treasury sold $44 billion of 7-year notes Thursday. Demand was only modest. That followed soft demand for Wednesday’s 5-year auction. The pattern matters.

The U.S. government needs to sell large amounts of debt. When buyers want higher yields before taking that debt, rates rise. That can keep pressure on stocks even when economic data is calm.

Wednesday had hot growth data. Thursday had another soft bond auction. Both kept Treasury yields high.

Weekly jobless claims fell to 197,000. That was another sign that layoffs remain low. The labor market is still holding up. That gives the Fed room to keep rates high.

It also gives policymakers more room to raise them again if inflation stays firm. Strong jobs are good for growth. But they also reduce the need for lower rates. That is why the same report can help the economy and hurt bonds.

New home sales jumped 6.4% in August. Sales reached an annual rate of 684,000. Economists had expected about 615,000. That was the strongest pace in about 8 months. Builders are still using price cuts and buyer incentives.

But the report showed demand has not disappeared. That matters to the Fed too. Housing is under pressure from high mortgage rates. Yet sales still rose. That is another sign that the economy has not slowed enough to force the Fed to stop.

Gold fell about 0.3% to roughly $4,274 an ounce. The reason was familiar. Treasury yields rose.

The dollar stayed firm. Fed hike odds stayed high. Gold pays no interest. When investors can earn more than 5% from long-term Treasury bonds, gold has to compete with a much stronger yield. That kept pressure on the metal Thursday.

Thursday left markets with a short list of hard numbers:

Thursday gave Wall Street a hard mix. Oil jumped. Treasury yields hit new highs. Fed hike odds stayed elevated. Stocks sold off early.

Then buyers came back. Brent closed at $106.60. The 30-year hit its highest level since 2004. October hike odds stayed near 70%. Yet the S&P 500 lost just 0.02%.

That tells us something important. Wall Street is still afraid of oil and rates. But any sign that Hormuz could reopen can pull buyers back fast. Oil surged. Yields hit a 22-year high. Stocks refused to break.