Stock Rally Stalls as Oil Rises on US-Iran Clashes: Markets Wrap
(Bloomberg) — Renewed attacks in the Persian Gulf lifted oil prices while keeping a lid on stocks and bonds amid mounting concern about the economic fallout of the war-driven spike in energy costs.
Clashes between the US and Iran highlighted the fragility of the ceasefire and the challenge of forging a peace deal that would restore global energy flows. Brent crude topped $96. While action in the equity market was fairly muted, the S&P 500 snapped a five-day winning streak that had sent the gauge to all-time highs. Treasury 10-year yields hovered near 4.5%.
Iran and the US accused each other of violating a truce in their three-month war, after Washington struck Iranian military targets for the second time this week. Ongoing negotiations via mediators are making progress, they say, although there’s little public sign of significant headway.
Higher energy prices resulting from the closure of the Strait of Hormuz are likely to keep inflation elevated and force central banks to hold rates higher for longer, rather than deliver cuts many expected before the conflict with Iran started.
US consumer spending edged up in April, with annual inflation accelerating to the highest level since 2023. Separate figures showed the economy expanded in the first quarter at a 1.6% annualized pace, slower than previously estimated.
“We think it’s unlikely the Federal Reserve hikes rates, given how the oil price spike is likely to be short-term, and since there is immense pressure on the Fed to keep rates in check and a hike would require an especially rare set of circumstances, such as a year or longer of $100 per barrel oil, and we are nowhere near that point yet,” said David Laut at Kerux Financial.
Federal Reserve Vice Chair Philip Jefferson expects inflation to cool later this year as the effects of tariffs and higher energy costs wear off, but he warned inflationary risks remain tilted to the upside. Minneapolis Fed President Neel Kashkari told CNBC that bringing down inflation remains his top priority, warning that consumer prices are still “much too high.”
Meantime, confidence among chief executive officers about the US economy tumbled in the second quarter as concerns intensified about supply chains and energy.
The Conference Board’s Measure of CEO Confidence dropped to 47 from 59 in the first three months of the year, according to results published Thursday. Readings below 50 indicate more negative than positive responses.
Corporate Highlights:
Snowflake Inc. gave a stronger-than-expected annual outlook and signed a $6 billion multiyear agreement to use Amazon.com Inc.’s cloud services and chips. Marvell Technology Inc. delivered a quarterly forecast that exceeded estimates and boosted its outlook for the year, citing demand for chips used in AI data centers. Salesforce Inc. gave a revenue outlook that fell just short of estimates, unnerving investors already concerned about the possibility that AI will disrupt the software business. A unit of Dell Technologies Inc. won a $9.7 billion contract to help the US military handle its licenses for Microsoft Corp. software related to email, spreadsheets and other needs across classified and unclassified systems, the Pentagon said. Best Buy Co. reported sales that topped estimates as demand for consumer electronics held up in the face of inflation and soaring gas prices. Kohl’s Corp. reported stronger-than-expected sales, as the department chain’s turnaround under Chief Executive Officer Michael Bender begins to take hold. Dollar Tree Inc. boosted comparable sales last quarter despite a decline in customer traffic by getting shoppers to spend more. Caesars Entertainment Inc. agreed to be bought by Fertitta Entertainment Inc. in a $5.7 billion, all-cash deal that stands to form a massive entertainment empire. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.1% as of 9:48 a.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 fell 0.8% The MSCI World Index fell 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1634 The British pound was little changed at $1.3421 The Japanese yen was little changed at 159.43 per dollar Cryptocurrencies
Bitcoin fell 3.2% to $72,745.48 Ether fell 4.1% to $1,975.83 Bonds
The yield on 10-year Treasuries was little changed at 4.48% Germany’s 10-year yield was little changed at 2.99% Britain’s 10-year yield declined one basis point to 4.84% The yield on 2-year Treasuries was little changed at 4.04% Commodities
West Texas Intermediate crude rose 2.5% to $90.87 a barrel Spot gold fell 0.6% to $4,425.16 an ounce ©2026 Bloomberg L.P.
