The 10-year Treasury yield rose to a new multidecade high after data showed the U.S. economy grew faster than expected in the second quarter while a key inflation gauge held steady.

A benchmark for interest rates on all types of debt, the 10-year yield rose to 5.304% in recent trading, pushing past its 2007 intraday peak of 5.303% to its highest level since May 2002, according to Tradeweb.

The move came after the U.S. Commerce Department revised its estimate for U.S. GDP growth for the second quarter to 2.2%, up from a prior estimate of 1.5%. Meanwhile, the Federal Reserve's preferred measure of inflation rose at an annual rate of 3.4% in August, matching July's revised rate.

The data illustrates both the economy's continued fight against rising prices and its resilience to the war in the Middle East. Investors this week have pared bets on an October interest-rate increase by the Fed, now pricing in only about a 39% chance of a hike.

The retreat in rate-hike expectations kicked off yesterday after a Fed official suggested the central bank isn't in a rush to raise rates. That temporarily stemmed the recent rout in Treasurys, whose prices fall as yields rise.

In stocks, the Nasdaq composite added nearly 1%, while the Dow industrials are down slightly.

Oil prices are on the rise, after easing in recent days as exports from the Middle East pick back up. Brent crude recently traded near $98.40, up 2.3%.