Stocks and Bonds Find Relief as Oil Prices Ease: Markets Wrap
(Bloomberg) — US stocks edged higher and Treasuries gained as oil prices eased, with traders holding fire ahead of the week’s first labor data and a string of artificial-intelligence events.
S&P 500 futures rose 0.1% after the index erased its gains for September in the previous session. Treasuries also advanced, pulling the 10-year yield two basis point lower to just below a 19-year high. The dollar was flat. Brent fell below $104 a barrel as top exporter Saudi Arabia resumed flows through a key pipeline.
Markets are finding their footing after a turbulent start to the week that saw volatile oil prices trigger selling across stocks and bonds. Among potential catalysts, traders will closely follow what emerges from a lunch meeting on AI safety risks between US President Donald Trump and industry leaders.
A busy stretch of economic data also kicks off with the release of the August job openings report. Traders will parse remarks from six Federal Reserve speakers for clues on the rate outlook at a time when markets are pricing as many as four hikes over the next 12 months.
“We’ve had some rather large moves over the last few days or so, and we’ll have the ultimate data trigger in the form of non-farm payrolls heading into Friday, so I think it makes sense for positions to be squared,” said Geoff Yu, a senior macro strategist at BNY. “Also worth bearing in mind it’s month-end, so there will be these passive transactions which are not aligned to data.”
Stocks have proved resilient in recent weeks even as higher borrowing costs cloud the outlook for growth and corporate earnings. Still, questions remain over whether chipmakers and other AI-linked stocks can keep pushing higher given concerns about valuations and whether capital outlays can be justified.
Worries that AI may cause harm have also moved to the fore, leading some industry executives, including Anthropic PBC head Dario Amodei, to call for a slowdown in the technology’s development.
As Amodei and others prepare to meet Trump, traders will also listen what OpenAI Chief Executive Officer Sam Altman has to say about the issue at the group’s annual developer conference. The ChatGPT chatbot owner is holding back a version of its Astra model to put stronger guardrails in place.
The impact of rising inflation was on display Tuesday when Australia’s central bank lifted borrowing costs to the highest level in about 15 years. In Spain, inflation moved further above the European Central Bank’s 2% target, reinforcing the case for higher euro-area rates.
Meanwhile, UK gilts outperformed European peers as markets waited for Prime Minister Andy Burnham to address the ruling Labour Party in Liverpool. Officials expect Burnham could signal he wants to begin a conversation about reforming the state pension to help pay for social care.
What Bloomberg Strategists Say:
“An oil risk premium remains justified and the supply shock persists. But the outlook is tilting lower, with options markets sending a similar signal. If crude keeps failing to make new highs, that will bring some relief to risk assets even as yields remain elevated.”
Corporate Highlights:
Jefferies Financial Group Inc.’s asset-management unit revenue slumped more than 50% in the fiscal third quarter, sending shares down as the bank grapples with fallout from tumultuous investments. Health and fitness ring-maker Oura Inc. became the latest company to delay a US initial public offering due to uncertainty in the market for first time offerings. Shareholders in the Shell Plc-led LNG Canada venture greenlit plans to double its liquefied natural gas export capacity, forging ahead with the multibillion-dollar investment as key customers in Asia face the biggest supply shock of recent times. Goldman Sachs Group Inc.’s board has discussed a plan where Waldron, who is currently chief operating officer, would succeed David Solomon as CEO as early as next year, the Wall Street Journal reported. Julius Baer Group Ltd. said the Swiss regulator Finma has ended its enforcement procedure against the bank and it has submitted a share buyback request.
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 8:28 a.m. New York time Nasdaq 100 futures rose 0.3% Futures on the Dow Jones Industrial Average rose 0.2% The Stoxx Europe 600 rose 0.4% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.2% to $1.1350 The British pound fell 0.1% to $1.3238 The Japanese yen was little changed at 157.25 per dollar Cryptocurrencies
Bitcoin rose 0.8% to $84,166.79 Ether rose 2% to $2,735.81 Bonds
The yield on 10-year Treasuries declined two basis points to 5.22% Germany’s 10-year yield declined five basis points to 3.59% Britain’s 10-year yield declined seven basis points to 5.36% Commodities
West Texas Intermediate crude fell 1.8% to $90.93 a barrel Spot gold rose 0.9% to $4,152.68 an ounce This story was produced with the assistance of Bloomberg Automation.
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