The Fed hiked and signaled more; the 10-year yield still fell to 4.94%
The 10-year Treasury yield fell to 4.94% on Thursday, September 17, 2026, and the S&P 500 gained 1.1% as semiconductors led, a day after the Federal Reserve’s first hike since 2023.
The Federal Open Market Committee voted 12-0 on Wednesday to raise the federal-funds target range by a quarter point to 3.75% to 4%, its first increase since 2023, and lifted its median year-end projection to 4.1% in both 2026 and 2027, from June medians of 3.8% and 3.6%. Thursday’s long-term Treasury ETF TLT rose 1.1% anyway, and the 10-year yield fell to 4.94%. The S&P 500 closed at 7,637.05, up 85 points, or 1.1%, taking back Wednesday’s post-hike decline.
Duration and the S&P 500 both bid Thursday
- TLT · 81.78
- SPY · 762.6
Bonds rally; the dots do not
The rest of the curve followed. The intermediate Treasury ETF IEF gained 0.6%, and the 1-3 year Treasury ETF SHY added 0.1%. Investment-grade credit LQD rose 0.7%; high-yield HYG rose 0.4%. The Treasury par curve dated Thursday put the 2-year yield at 4.67%, the 10-year at 4.94%, and the 30-year at 5.29%. The 2-year/10-year spread was 0.27 percentage points.
The 2026 median still implies another increase this year. Fed-funds futures tracked by CME FedWatch put the odds of a quarter-point rise at the October 28 meeting at 55.1% on Thursday, a slight favorite rather than a lock. Mohamed El-Erian, Allianz’s chief economist, said Thursday he preferred the Fed had not hiked.
The Bank of England held Bank Rate at 3.75% and pulled long-dated gilts out of quantitative tightening.
A Labor Department report at 8:30 a.m. ET fit the Fed’s description of a labor market that can bear higher rates: initial jobless claims fell 10,000 to 196,000 in the week ended September 12, and the four-week average dropped to 203,250.
West Texas Intermediate was at $101.27 a barrel at 4:31 p.m. ET, down 1.1%. Brent was at $104.21, down 1.5%. Additional Saudi cargoes moving through Oman, and US comments that last week’s East-West pipeline outage would be brief, took some of the urgency out of a supply scare that had pushed crude near $106 earlier in the week. The energy sector ETF XLE still rose 0.7%.
Semiconductors carry the indexes
The same session that lifted long Treasurys also lifted chip stocks. The S&P 500 ETF SPY rose 1.1%. The Nasdaq-100 ETF QQQ rose 1.7%. The equal-weight S&P 500 ETF RSP and the Russell 2000 ETF IWM each gained 0.5%: cap-weighted indexes outran equal-weight and small-cap funds. Across US-listed ETFs, 4,531 of 5,461 priced funds closed higher. The Dow industrials recovered only about half of Wednesday’s 1.2% drop and still finished below Tuesday’s close. The Cboe Volatility Index fell 12.8% to 15.44, reversing Wednesday’s rise.
The technology sector ETF XLK gained 2.2%, the best of the 11 SPDR sector funds on Thursday, and the semiconductor ETF SMH rose 2.8%.
Technology led every SPDR sector fund
- +2.2%
- +1.1%
- +0.8%
- +0.7%
- +0.7%
- +0.6%
- +0.3%
- +0.2%
- +0.2%
- −0.1%
- −0.6%
Nvidia, at an 8.0% weight in SPY, contributed 0.20 percentage points with a 2.5% gain. Micron added 0.09 points on a 5.5% rise; Apple and Microsoft added 0.10 and 0.09 points. Those four names accounted for 0.48 percentage points of the S&P 500 fund’s 1.1% move.
In QQQ, the mix was more purely chips. Micron, Advanced Micro Devices, Nvidia and Intel contributed 0.88 percentage points of the fund’s 1.7% gain. Intel rose 7.7%. Reports during the session put SK hynix in early talks to produce memory at Intel’s Ohio complex. AMD rose 6.4%, Arm Holdings 8.6%, Marvell 4.8%, and Super Micro Computer 9.5%. They arrived as a group, which is usually how a factor trade looks.
T-Mobile fell 5.6% to $166.45, a print next to its 52-week low of $165.66, and the communications ETF XLC fell 0.6%, its third consecutive decline through Thursday, September 17. The financials ETF XLF slipped 0.1%, a fourth straight down session, and did not join a day when long-term yields were falling. Berkshire Hathaway Class B dropped 2.0% and was the largest single drag on SPY.
Generac’s Amazon backup-power contract
Generac Holdings disclosed in a Wednesday 8-K a long-term agreement to supply backup generators for Amazon data centers: $2.4 billion of initial deliveries expected in 2027 and 2028, with purchases that could reach $8 billion, plus a warrant on up to 1.69 million Generac shares. Thursday was the first regular session after the filing, and the shares rose 18.3%. Amazon gained 2.1%. The contract puts a dollar figure on data-center power demand, the part of the AI build that does not show up in a semiconductor fund.
Friday’s test is the 10-year yield. Hold near 4.94% and Thursday’s bond bid still stands against the 4.1% median. A reversal higher would leave Wednesday’s dots unchallenged.
Frequently asked
Why did yields fall if the Fed just hiked and signaled more?
The article doesn't assign a cause; it reports bonds rallied across the curve anyway, with the 10-year at 4.94% against a higher Fed median.
How likely is another hike this year?
Fed-funds futures tracked by CME FedWatch put the odds of a quarter-point rise at the next meeting at 55.1%, a slight favorite rather than a lock.
What drove the stock gains?
Chips did the work, with Micron, AMD, Nvidia and Intel supplying most of the Nasdaq-100 fund's move and Intel up 7.7% on reports SK hynix may produce memory at its Ohio complex.
Why did oil fall?
Extra Saudi cargoes moving through Oman and US comments that last week's pipeline outage would be brief took the urgency out of a supply scare.