Wall Street is bracing for continued market shifts as Federal Reserve minutes signal more rate hikes, pushing Treasury yields to multi-year highs and prompting warnings from market veterans about potential bond market “breaks.” While major indices like the S&P 500 recently hit new highs, a new report on tariffs’ impact on consumers is expected, alongside significant declines in mall retail stocks.
Investors will also keenly watch PepsiCo’s earnings and interviews with its CEO, Ramon Laguarta, as well as Skydance’s co-CEOs David Ellison and Ynon Kreiz, following the company’s recent merger and weak stock performance.
As Wall Street looks ahead to Thursday's trading session, the specter of continued interest rate hikes by the Federal Reserve looms large, threatening to inject further volatility into an already tense market.
Wednesday's release of the Federal Reserve's September meeting minutes painted a clear picture: another rate hike is likely before the year's end. This hawkish outlook has been absorbed by prediction markets, with Kalshi now estimating a 76% probability of a hike before late 2026. The implications are not lost on market veterans. Cem Karsan, a seasoned options trader from the Cboe, issued a stark warning on CNBC's "Power Lunch," stating, "We're getting to the edge." Karsan cautioned that investors could "wake up one morning and bonds will move 20 basis points and things will really start to break."
Indeed, the bond market is already signaling stress. Yields on U.S. 30-year and 10-year Treasuries have climbed to highs not witnessed since 2002, with the 2-year yield hovering at 4.77%. Despite this, the equity markets have shown remarkable resilience, at least until recently. The S&P 500, Nasdaq Composite, and Nasdaq-100 all touched new highs on Tuesday. Year-to-date, the S&P 500 is up approximately 14%, the Nasdaq-100 an impressive 23.4%, and the Nasdaq Composite 18.5%.
Beyond macroeconomic forces, specific sectors are feeling the pinch. A forthcoming New York Fed report, teased by CNBC TV's Megan Cassella, is expected to detail how tariffs are inflating costs for American consumers. This pressure is evident in the performance of several major mall retail stocks:
- Best Buy: Down 12% from last month's high, but still up 32% over six months.
- Dillard's: Also off 12% from its December 2025 high, yet surged 25% in three months.
- Macy's: Dropped 14% from its August high, but saw a 26% rise over six months.
- Gap: Sits 19% below its February high.
- Kohl's: Down 20% from its December peak.
- Five Below: 23% below its August high.
- Bath and Body Works: Plunged 35% from its October 2025 high.
Individual corporate news also takes center stage. PepsiCo (PEP) finds itself at lows not seen since April 2020, the onset of the Covid pandemic, with shares down nearly 15% in three months. All eyes will be on its earnings report before the bell Thursday on CNBC's "Squawk Box," followed by an interview with CEO Ramon Laguarta on "Squawk on the Street."
The newly merged entity Skydance, led by co-CEOs David Ellison and Ynon Kreiz, will also be under scrutiny. The pair is set to join CNBC's David Faber live at 8:45 a.m. Thursday, following a rocky start for the company post-merger, with shares down 6.4% this week and approximately 14% in October.
Finally, telecom giant Comcast (CMCSA) continues its struggle, trading at lows last observed in October 2013. The stock closed Wednesday down 36% from its February high and a significant 25% year-to-date in 2026.
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