Oil Surge, War Risks Pressure Stocks Despite Bond Bounce – US Market Wrap
Stocks slipped, yields edged lower, oil surged above $100, and the dollar strengthened as Middle East tensions drove markets.
Treasuries rebounded following a prior selloff driven by concerns over the economic impact of the Iran war, with traders reinstating bets on a 2026 rate cut after Fed Chair Powell played down immediate inflation risks from higher energy prices.
The bond market pared what is set to be its worst monthly decline since 2024 as Powell said longer-term inflation expectations remain anchored, with traders unwinding bets on a rate hike. The S&P 500 fell 0.4% as a selloff in chipmakers outweighed gains across most sectors. US oil climbed above $100.
The Middle East conflict has disrupted global markets and raised fears of a simultaneous rise in inflation and slowdown in growth. The war has cut off a key energy supply route, lifting oil prices and pushing stocks toward their worst month since 2022.
The White House warned of further escalation against Iran, including strikes on critical civilian energy infrastructure, as the fifth week of fighting shows little sign of easing.
President Donald Trump said earlier Monday that if Tehran does not reopen the Strait of Hormuz, “we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating” power plants, oil sites, and “possibly” desalination facilities.
