Oil Spike Jolts Bonds as Geopolitical Risks Rise, Stocks Trim Losses – US Market Wrap

A surge in oil prices tied to escalating tensions with Iran rattled fixed-income markets and lifted the dollar, while equities rebounded from earlier losses. Inflation concerns intensified as disruptions threatened key energy supply routes.

Treasuries came under pressure as manufacturing data showed renewed expansion and a sharp increase in input costs. The yield on 10-year notes jumped 10 basis points to 4.04%, putting it on track for its biggest advance since April. Markets now fully price the first Federal Reserve rate cut in September, with expectations for a third reduction in 2026 largely fading.

The S&P 500 finished little changed after falling more than 1% earlier in the session. Energy and defense stocks led gains, while several cash-rich technology firms also advanced. Airlines declined. Gold climbed above $5,300.

Oil markets reacted sharply to the near standstill in traffic through the Strait of Hormuz and operational disruptions at a major Saudi refinery, highlighting risks to global supply. West Texas Intermediate crude surged 6.3% to settle at $71.23 per barrel. European natural gas prices also spiked after Qatar shut down the world’s largest LNG export facility.

Despite the volatility, the rebound in major equity indexes suggests investors currently see the conflict as a serious geopolitical development, but one that remains financially contained for now.
The dollar strengthened 0.7% on the session.