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Stocks slide as Middle East tensions lift crude and bond yields
The 10-year Treasury yield rose to a 19-month high of 4.76%, while WTI climbed more than 2% after US and Iran exchanged strikes for the first time in about a month.
US stocks fell across major benchmarks on Monday as renewed geopolitical risks intensified pressure from higher crude prices and rising Treasury yields, according to Yahoo Finance. The S&P 500 fell 0.50%, the Dow Jones Industrial Average declined 0.67% to a 1-week low, and the Nasdaq 100 dropped 0.29%.
Oil gains fed into inflation concerns and made the US inflation outlook harder to read. WTI crude rose more than 2% to a 1-week high after the United States and Iran exchanged strikes for the first time in about a month, and further tensions included reports of targets in the Strait of Hormuz, with Iran firing missiles and drones at US air bases in Jordan and the United Arab Emirates intercepting drones from Iran.
Bond markets also tightened, with the 10-year T-note yield jumping to 4.76%, a level last seen 19 months ago. Yahoo Finance also pointed to carryover from comments by Federal Reserve Chair Warsh on Friday, including a shift in market pricing for a Fed rate hike at next month’s FOMC meeting, where the probability rose to 65% from 36% before he spoke.
Some support for stocks came from expectations around earnings, with Q2 growth tracking near 32% for the S&P 500, above a projection of 23% and described as well above longer run averages outside the Covid period, according to the outlet.
Latest closeWTI crude $90.79 ▲5.9%|S&P 500 7,631.47 ▼0.7%|Nasdaq Comp. 26,099.77 ▼1.0%