U.S. stocks closed lower on Oct. 7 as Treasury yields surged. The S&P 500 and Nasdaq, which had both set record highs a day earlier, failed to extend their gains as higher rates weighed on sentiment.

The Dow Jones Industrial Average fell 0.66% to 51,179.87. The S&P 500 lost 0.22% to 7,801.77, while the Nasdaq Composite also closed down 0.22% at 27,538.69.

In the bond market, inflation concerns and expectations for increased U.S. government spending pushed yields sharply higher. The 10-year Treasury yield rose above 5.36% during the session, reaching its highest level since 2002. The 30-year yield also climbed into the 5.73% range, its highest level in 24 years.

Technology stocks came under pressure as yields rose. Meta Platforms fell more than 2%, while cybersecurity firms Palo Alto Networks and CrowdStrike dropped more than 3% and about 5%, respectively. The Philadelphia Semiconductor Index fell 1.2%.

Stocks trimmed some of their losses in the afternoon after demand was confirmed at a Treasury auction. Market yields eased to around 5.28% after the U.S. Treasury's $39 billion sale of 10-year notes. The auction's high yield was 5.3%, the highest since 2000.

Falling oil prices also helped limit further declines in equities. West Texas Intermediate crude settled down 1.3% at $88.28 a barrel after news that the International Energy Agency would bring forward the release of emergency oil stockpiles. Brent crude fell 0.38% to $100.20.

Meanwhile, minutes from the Federal Open Market Committee's September meeting, released that day, reinforced the possibility of further tightening. Most Federal Reserve participants judged that raising interest rates once more before year-end could be appropriate. The minutes, however, gave no specific signal on the timing of any move.