Stocks Fall as US-Iran Standoff Boosts Bond Yields: Markets Wrap
(Bloomberg) — A standoff between the US and Iran boosted oil prices, dragging down stocks and bonds on concerns that elevated energy costs could fuel inflation and trigger further Federal Reserve rate hikes.
Brent crude climbed to around $107 on fading optimism for an imminent diplomatic breakthrough in the Middle East conflict. The S&P 500 erased this month’s advance while the tech-heavy Nasdaq 100 lost about 1.5%. Treasury 10-year yields hit a nearly two-decade high. Money markets boosted bets on an October Fed increase. The dollar rose. Gold dipped.
Iran and the US appeared far apart on a new ceasefire deal or the reopening of the vital waterway, with Tehran saying it’s sticking to a proposal President Donald Trump has rejected. Still, Iran’s Foreign Minister Abbas Araghchi was due to meet mediators in New York on Monday, the Iranian Students’ News Agency reported.
Months of stop-start negotiations have yet to solve a conflict that has disrupted oil flows through the vital strait. Prices swung last week on mixed signals that negotiations might be productive, only for hopes to collapse into more uncertainty — as they have many times before — while the two sides enter an eighth month of war.
“The broader market hasn’t been able to gain much traction because of rising yields and oil prices,” said Chris Larkin at E*Trade from Morgan Stanley. “And with the Fed focused on the inflation side of its mandate, unless this week’s labor market data is a major surprise, it will likely play second fiddle to interest rates and energy.”
“The focus will be on the bond market as earnings season is still a couple of weeks away,” said Matt Maley at Miller Tabak. “So, oil prices and this week’s plethora of economic data will be the focus.”
Key reports are expected to add further evidence the US economy is strengthening, bolstering arguments from several Fed officials that rates should be higher.
Economists expect figures Wednesday to show inflation-adjusted consumer spending surged in August by the most this year. And while a revamp of the Fed’s preferred gauge of underlying inflation is seen reducing the annual measure by as much as three-tenths of a percentage point, the monthly picture will likely be less comforting.
Those numbers will be followed on Friday by employment data forecast to show that jobs growth remains robust. As of Friday, economists expected employers to add about 90,000 workers in September and unemployment to remain at 4.1%.
“Our view remains that the US economy is resilient enough to absorb the impact of modestly tighter monetary policy,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
Corporate Highlights:
Nvidia Corp., the chip developer at the heart of the artificial-intelligence boom, increased the size of its share buyback plan by a record $150 billion, reflecting Chief Executive Officer Jensen Huang’s confidence in its continued growth. Shares of software companies sank after Meta Platforms Inc. introduced Meta Enterprise Platform, that is designed to bring the company’s Muse AI agent product to more businesses and developers. Meta Platforms tapped MongoDB Inc.’s president and chief executive officer to lead a new AI platform for enterprise customers that Meta CEO Mark Zuckerberg called “the next major pillar of our business.” Paramount Skydance Corp.’s plan to sell more than $44 billion of bonds in US dollars and euros to fund its acquisition of Warner Bros. Discovery Inc. is now in motion. SpaceX’s massive Starship rocket reached orbit for the first time on Monday morning, achieving a milestone for the program after the mission briefly looked at risk because an engine failed during ascent. What Bloomberg strategists say…
“If we assume that there’s a lower limit for the equity risk premium, then any further selling in bonds is going to push stocks down, and they won’t be able to rally until yields fall.”
—Sebastian Boyd, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.8% as of 11:30 a.m. New York time The Nasdaq 100 fell 1.3% The Dow Jones Industrial Average fell 0.7% The Stoxx Europe 600 rose 0.1% The MSCI World Index fell 0.7% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1370 The British pound was little changed at $1.3257 The Japanese yen was little changed at 157.40 per dollar Cryptocurrencies
Bitcoin fell 1.8% to $83,049.26 Ether fell 0.7% to $2,666.85 Bonds
The yield on 10-year Treasuries advanced 10 basis points to 5.26% Germany’s 10-year yield advanced four basis points to 3.64% Britain’s 10-year yield advanced six basis points to 5.43% Commodities
West Texas Intermediate crude rose 3.2% to $95.38 a barrel Spot gold fell 3.7% to $4,125.05 an ounce ©2026 Bloomberg L.P.
