SPY Slides as Tech Stocks Falter Amid Rising Treasury Yields and Energy Costs

The S&P 500 ETF (SPY) closed down 0.72% on September 24, 2026, reflecting a broad market sell-off driven by a sharp rise in Treasury yields and climbing energy prices. The 10-year Treasury yield surged to 5.135%, its highest level since July 2007, fueled by weak demand at a $70 billion 5-year Treasury auction and hawkish commentary from Federal Reserve officials. Brent crude oil prices also jumped 3.9%, settling at $103.08 a barrel, adding inflationary pressure and weighing on market sentiment.

This combination of macroeconomic forces intensified expectations for further Fed rate hikes, with markets now pricing in over a 68% probability of an increase in October. The resulting environment has heightened investor caution, particularly toward high-valuation sectors sensitive to borrowing costs, most notably technology.

Tech Sector Under Pressure: Heavy AI Spending and Debt Concerns

The technology sector ETF (XLK) declined 0.47%, dragged down by steep losses in some of its largest components. Alphabet (GOOGL) led the declines, falling nearly 3.8%. Despite recent product expansions such as free AI video creation tools and the impending launch of Gemini 4, investor skepticism remains high. Alphabet's planned capital expenditures for 2026, estimated between $175 billion and $185 billion, primarily target data centers and AI infrastructure. This massive spending raises concerns about the company’s ability to sustain profit margins if revenue growth does not keep pace.

Oracle (ORCL) also suffered a 3.1% drop amid similar worries. The company forecasts fiscal 2027 capital expenditures of $90 billion to $95 billion for AI infrastructure, alongside an expanding debt load and ongoing workforce restructurings aimed at offsetting these costs. Loans tied to Oracle’s Project Jupiter data center have recently traded at stressed levels following an S&P downgrade. Oracle’s co-CEO Mike Sicilia’s recent sale of $3.42 million in shares has added to investor unease.

Other tech names like Broadcom (AVGO), Amazon (AMZN), and AMD (AMD) also posted declines ranging from 1.5% to nearly 2.6%, reflecting a broad-based tech sell-off.

Sector Rotation: Energy Gains While Consumer and Healthcare Slip

While tech stocks faltered, the energy sector (XLE) was the clear winner, rising 0.95% on the back of higher oil prices. Brent crude’s climb above $100 a barrel has buoyed energy companies, providing a counterbalance to the broader market weakness.

Conversely, consumer discretionary stocks (XLY) declined sharply by 1.5%, reflecting concerns about inflation’s impact on consumer spending. The healthcare sector (XLV) also slipped 0.64%, while financials (XLF) edged down 0.47%. Industrials (XLI) were relatively flat, down just 0.1%, indicating a cautious stance among investors.

What This Means for Investors

The current market environment highlights the growing tension between rising interest rates and the tech sector’s heavy investment in AI and infrastructure. High borrowing costs make it more challenging for companies with large capital expenditures to maintain margins, especially if revenue growth slows.

Investors should watch closely how companies like Alphabet and Oracle manage their spending and debt levels in the coming quarters. The sector rotation toward energy and defensive sectors suggests a preference for more stable cash flows amid uncertainty.

This dynamic also underscores the importance of diversification and careful stock selection in a market increasingly influenced by macroeconomic shifts. For those looking to navigate these conditions, comparing broker access, fees, and platform features can be crucial; platforms like eToro offer varied options for investors seeking exposure to these sectors.

Key Data Table: Sector and Stock Performance on September 24, 2026

What to Watch Next

Investors should monitor the Federal Reserve’s upcoming policy signals closely, especially any comments hinting at the pace and scale of rate hikes. The October Fed meeting is now a critical event, with markets pricing in a high likelihood of tightening.

Earnings reports from major tech companies will also be pivotal. How Alphabet, Oracle, and peers manage their AI investments and capital expenditures amid rising costs will shape sentiment and sector positioning.

Finally, keep an eye on Treasury auction demand and oil price trends, as these will continue to influence bond yields and inflation expectations, respectively.

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FAQ

Why did SPY fall on September 24, 2026?

SPY declined primarily due to a surge in Treasury yields to levels not seen since 2007 and rising oil prices, which increased inflation concerns and pressured high-valuation tech stocks.

What caused the sharp drop in Alphabet and Oracle shares?

Both companies faced investor skepticism over their massive AI-related capital expenditures and, in Oracle’s case, an expanding debt load and stressed loans, raising concerns about profitability and financial health.

Which sectors gained amid the sell-off?

The energy sector gained nearly 1% due to higher oil prices, while defensive sectors like healthcare and financials saw smaller declines, indicating a rotation away from growth-oriented tech stocks.

How are Fed expectations influencing the market?

The market now prices in over a 68% chance of a Fed rate hike in October, increasing borrowing costs and pressuring sectors sensitive to interest rates, particularly technology.

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Related reading

A useful background piece for this story is Stock Brokers.

Readers who want the wider market context can also use How to invest in stocks.

Sources

• moomoo.com
• ic.com
• straitstimes.com
• home.saxo
• caixabankresearch.com