Stocks Fall as US-Iran Standoff Boosts Bond Yields: Markets Wrap
(Bloomberg) — A standoff between the US and Iran lifted 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 $106 on fading optimism for an imminent diplomatic breakthrough in the Middle East conflict. The S&P 500 almost erased this month’s gain while the tech-heavy Nasdaq 100 lost about 1%. 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. Trump is willing to give Iran sanctions relief and release frozen funds for “concrete progress” on a nuclear deal, according to a CNN report.
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.
“Our expectations remain that the conflict will be with markets for the foreseeable future and the global economy will continue adjusting to the realities of the supply disruptions,” said Ian Lyngen at BMO Capital Markets.
Such a backdrop implies that energy prices will be biased higher, or at least the floor for any selloff has been increased unless and until there is a durable agreement to reopen Hormuz, he added.
“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.”
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%.
“If economic resilience and investment demand remain intact, there may still be scope for yields to move higher,” said Seema Shah at Principal Asset Management.
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. Meta Platforms Inc. 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.” Top executives from Anthropic PBC, OpenAI, Meta and Microsoft Corp. are urging policymakers to scrutinize the extent that AI systems are improving themselves and take steps to safeguard the technology. 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 even though the company cut the mission short after an earlier engine failure. 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 0.6% as of 1:03 p.m. New York time The Nasdaq 100 fell 1% The Dow Jones Industrial Average fell 0.5% The MSCI World Index fell 0.6% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1372 The British pound rose 0.1% to $1.3265 The Japanese yen was little changed at 157.36 per dollar Cryptocurrencies
Bitcoin fell 1% to $83,714.29 Ether was little changed at $2,687.14 Bonds
The yield on 10-year Treasuries advanced nine basis points to 5.25% Germany’s 10-year yield advanced four basis points to 3.64% Britain’s 10-year yield advanced six basis points to 5.42% Commodities
West Texas Intermediate crude rose 0.8% to $93.15 a barrel Spot gold fell 3.7% to $4,127.67 an ounce ©2026 Bloomberg L.P.
