Stocks Fall as Oil Jump Keeps Bond Yields Elevated: Markets Wrap
(Bloomberg) — A fresh bout of bond volatility left traders unwilling to make riskier bets, with stocks falling on worries that an oil rally will fuel inflation and force the Federal Reserve to lift rates.
While Treasuries trimmed losses, global yields hovered near the highest since 2008 as Middle East hostilities raised concerns about further disruptions to energy flows through the Strait of Hormuz. Brent crude topped $92. That didn’t bode well for equities at the start of a seasonally weak month, with the S&P 500 also dragged down by a rout in chipmakers.
Investors are demanding greater compensation to hold bonds as concerns about persistent inflation, government spending and surging corporate borrowing to finance the artificial-intelligence buildout intensify. Against this backdrop, money markets see a Fed hike as more likely than not in September.
“The stock market has been able to ignore these moves so far this year,” said Matt Maley at Miller Tabak. “However, as we have seen in the past, higher yields don’t matter for stocks until they do.”
Expectations for a hike increased last week after Fed Chairman Kevin Warsh warned in a major speech in Jackson Hole, Wyoming, that inflation wasn’t slowing meaningfully and said officials would need to act if price pressures don’t ease soon.
“Warsh will be attentive to the impact that higher oil has on inflation compensation across all horizons and on bond yields,” said Krishna Guha at Evercore. “A single Fed hike would have a trivial effect on longer-term yields and even two or three may not have much impact.”
But upward pressure on yields will push Warsh to require a more clear-cut signal from the data that it is reasonable to pass on a September hike, he added.
Fed Governor Michael Barr said the central bank should be prepared to raise interest rates if inflation fails to subside, warning price pressures are at risk of becoming entrenched after being above target for more than five years. He said officials can afford to be patient if upcoming data provide some signal that inflation is cooling.
Treasury Secretary Scott Bessent dismissed the importance of the Strait of Hormuz, saying the waterway that’s been controlled by Iran during the recent conflict will get bypassed by oil pipelines. He spoke in a fireside chat with Larry Kudlow at a gathering of global finance chiefs.
On the economic front, job openings edged higher in July and layoffs fell, suggesting demand for workers remains stable at a subdued level. Manufacturing activity expanded for an eighth straight month in August, though a moderation in new order and employment growth signaled some cooling in factory demand.
Corporate Highlights:
Apple Inc.’s Tim Cook handed over the reins to John Ternus, capping a tenure as chief executive officer that cemented the company as an iconic global brand and turned its stock into one of the most reliable bets. Anthropic PBC agreed to a $35 billion computing deal with Lambda, a cloud provider backed by Nvidia Corp., part of an effort to quickly expand its AI capacity, according to a person familiar with the matter. GoPro Inc. soared after the action camera maker entered into a definitive merger agreement with privately held company Starman Optical Inc. Fervo Energy Co. signed a deal to sell almost 400 megawatts of power to Alphabet Inc.’s Google for a prospective data center in Utah. Chevron Corp. is finalizing a deal that will significantly expand its operations in Venezuela by adding two giant oil fields in the Orinoco Belt, part of a push by US President Donald Trump to ramp up production in the South American country. What Bloomberg strategists say…
“Rates volatility is generally well-contained; that matters, because most of the significant downdrafts in stock prices over the past few years have coincided with spikes in rate vol.”
—Cameron Crise, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.3% as of 12 p.m. New York time The Nasdaq 100 fell 0.7% The Dow Jones Industrial Average fell 0.4% The Stoxx Europe 600 fell 0.6% The MSCI World Index fell 0.4% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1591 The British pound fell 0.2% to $1.3526 The Japanese yen fell 0.2% to 160.05 per dollar Cryptocurrencies
Bitcoin fell 1.2% to $77,939.2 Ether fell 1% to $2,448.97 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.77% Germany’s 10-year yield advanced two basis points to 3.34% Britain’s 10-year yield advanced 16 basis points to 5.22% Commodities
West Texas Intermediate crude rose 3% to $88.32 a barrel Spot gold fell 1.5% to $4,371.94 an ounce ©2026 Bloomberg L.P.
