US STOCKS-S&P 500 flat as higher bond yields counter tech optimism

Updates after markets open

By Shashwat Chauhan and Tharuniyaa Lakshmi

Sept 29 (Reuters) - The benchmark S&P 500 was flat on Tuesday, as rising government bond yields hurt risk sentiment and offset gains in AI-related stocks driven by optimism about Anthropic's plan to go public.

The yield on the benchmark 10-year Treasury bond US10YT=RR climbed to 5.078% — near its highest level since 2007 — strengthening expectations of a tighter monetary policy.

Oil prices retreated, but concerns that energy-driven inflation would force central banks to keep interest rates elevated for longer hit risk assets.

US President Donald Trump earlier said he has offered Iran nothing to end the war, rejecting media reports that he was willing to offer some relief from sanctions.

At 10:18 a.m. ET, the Dow Jones Industrial Average .DJI fell 88.11 points, or 0.17%, to 51,393.40. The S&P 500 .SPX declined 0.24 points to 7,683.45 and the Nasdaq Composite .IXIC gained 1.13 points to 26,821.51 — both trading flat.

Six of the 11 S&P 500 sectors lost ground — with healthcare .SPXHC the biggest drag, down 0.8%.

Chipmakers helped offset declines as they recovered some ground after the previous session's sharp fall. The broader Philadelphia chips index .SOX climbed 2.1%.

Megacap and growth stocks were mixed. Meta Platforms META.O and Nvidia NVDA.O advanced, while Microsoft MSFT.O and Apple AAPL.O fell around 1% each.

Tech stocks were in focus as Anthropic's IPO prospectus showed how the AI lab has grown sharply in the last year but also posted wider losses. The company is targeting a $2 trillion-plus valuation, possibly setting a benchmark for how Wall Street measures AI leaders.

"The market is in somewhat of a show-me phase," said Newton Jones of Zizmer-Jones Private Wealth Management Group at Steward Partners. "Earnings growth has been phenomenal, but expectations are extremely high and a lot of the good news is already priced in."

The AI theme, which has powered most of the bull run since October 2022, remains crucial. Remarks from OpenAI CEO Sam Altman during the company's DevDay event later in the day would be on investors' radar.

On the data front, job openings fell to 7.079 million in August, a US Labor Department report showed. Meanwhile, the September Consumer Confidence Index was at 81.9, missing analysts' estimates of 89.2.

Economic data has increasingly been under scrutiny, with the Federal Reserve dialing back commentary on policy outlook under Chair Kevin Warsh. Traders currently see a 70% chance of another interest rate hike in October, according to the CME FedWatch Tool.

At least six Fed officials, including New York Fed President John Williams, are set to speak on Tuesday.

Among other movers, used-car retailer CarMax KMX.N jumped 7.8% after reporting increased second-quarter profit and revenue.

Credit-scorer Fair Isaac Corp FICO.N slumped 23.1% after Federal Housing Finance Agency Director Bill Pulte said Fannie Mae and Freddie Mac will move to a single pricing grid.

Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.

The S&P 500 posted six new 52-week highs and 23 new lows while the Nasdaq Composite recorded 24 new highs and 128 new lows.

(Reporting by Shashwat Chauhan and Tharuniyaa Lakshmi in Bengaluru; Editing by Joyjeet Das)

((Shashwat.Chauhan@thomsonreuters.com;))