Stocks Whipsawed by Oil Volatility as War Drags On: Markets Wrap
(Bloomberg) — Volatility whipsawed stocks as traders parsed conflicting signals about the outlook for oil supplies as the war in Iran rattles energy markets. In late hours, Oracle Corp. jumped on a strong sales forecast.
The S&P 500 wiped out its advance. US crude trimmed a plunge that briefly drove it below $80 as the White House said no tanker has been escorted by the navy through the Strait of Hormuz, refuting an earlier, since-deleted social media post by Energy Secretary Chris Wright. Oil still sank 12%, the most since 2022, as big economies mull deploying stockpiles to avoid a crunch.
The swings in energy markets added to pressures on Treasuries stemming from jitters over the outlook for the Iran conflict, a flurry of corporate debt sales and a weak $58 billion US auction. Fears that a deeper supply shock would rekindle inflation and slam the brakes on the economy have kept a lid on bonds.
The US and Iran escalated attacks in the 11th day of the war while the White House said it’s keeping open options to address energy volatility. President Donald Trump warned Iran against laying mines in the Strait of Hormuz after news reports suggested it was either preparing to, or had already begun doing so.
Meantime, Group of Seven nations asked their main energy agency to prepare scenarios for the release of emergency oil reserves.
Oil prices are almost 40% higher since the beginning of the year as the effective closure of the Strait of Hormuz, which typically handles a fifth of global oil flows, piles more pressure on producers to curtail output with every day the Iran war goes on.
“While traders welcomed the sudden drop in oil prices, the geopolitical backdrop remains far from stable, leaving markets vulnerable to further volatility,” said Fawad Razaqzada at Forex.com. “Ultimately, the biggest factor for markets will be whether energy supplies from the region resume normally.”
The S&P 500 fell 0.2%. West Texas Intermediate settled near $83. The yield on 10-year Treasuries rose five basis points to 4.15%.
“The conflict in the Middle East and related headlines are still the major source of fluctuations in markets, with equities, oil, and rates all spending another day trying to find equilibrium,” said Sameer Samana at Wells Fargo Investment Institute. “We would continue to try and look through those near-term headlines.”
Investors betting on a hawkish response to rising oil prices could be misreading the Federal Reserve, according to Bank of America Corp., which warns that supply shocks can also result in periods of stable interest rates and even deep cuts.
An energy shock isn’t necessarily hawkish, US economist Aditya Bhave noted, because it can create tension between the central bank’s mandates to promote stable prices and support employment.
As Wall Street was rattled by oil volatility, traders geared up for inflation data due after the latest jobs report challenged perceptions the labor market is stabilizing.
The consumer price index report on Wednesday is projected to show a core inflation measure, which strips out volatile food and energy costs, rose just 0.2% last month. That would suggest some easing in price pressures before the outbreak of the war in Iran introduced new uncertainty about the inflation outlook.
While the report has lost some of its importance given recent moves in energy prices, any additional signs of inflationary pressures could sound the “death-knell” for rate cut expectations this year, according to David Morrison at Trade Nation.
Corporate Highlights:
Boeing Co. said a wiring flaw found on its 737 Max will delay some deliveries of its cashcow narrowbody jet. Alphabet Inc.’s Google is introducing AI agents across the Pentagon’s three million-strong workforce to automate routine jobs, according to a senior defense official. Nvidia Corp. is making a new investment in Thinking Machines Lab, a company founded by former OpenAI executive Mira Murati. Amazon.com Inc. is borrowing $37 billion in dollar bonds in an offering that could swell to nearly $50 billion with a planned euro debt sale. Salesforce Inc. is planning to sell as much as $25 billion of debt to fund a share buyback, according to people with knowledge of the matter. Honeywell Aerospace Inc. launched a $16 billion inaugural US investment-grade bond sale as it prepares for a planned spinoff.
What Bloomberg Strategists say…
“The whipsaw in risk sentiment since the Iran conflict broke out shows the perils of being beholden to an asset as exposed to geopolitical tensions as crude. For stocks, the reality in the near term is that gyrations are here to stay until there’s a clear off-ramp from the war.”-Kristine Aquino, Managing Editor, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.2% as of 4 p.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average was little changed The MSCI World Index rose 0.4% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro fell 0.2% to $1.1612 The British pound fell 0.1% to $1.3417 The Japanese yen fell 0.2% to 158.04 per dollar Cryptocurrencies
Bitcoin rose 1.8% to $70,195.4 Ether rose 0.8% to $2,041.57 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.15% Germany’s 10-year yield declined two basis points to 2.84% Britain’s 10-year yield declined nine basis points to 4.55% Commodities
West Texas Intermediate crude fell 8.5% to $86.73 a barrel Spot gold rose 1.2% to $5,198.46 an ounce ©2026 Bloomberg L.P.
