Stocks Fall as Oil Rally Boosts Treasury Yields: Markets Wrap

(Bloomberg) — A rally in oil prices sent stocks lower while lifting Treasury yields, fueling worries about inflation in the countdown to Friday’s jobs report.

Escalating tensions in the Middle East and lack of clarity on a deal to revive the Strait of Hormuz drove Brent crude above $82. Higher energy costs stoked concerns the Federal Reserve will have to raise interest rates. The S&P 500 fell for a second straight day. Memory companies Sandisk Corp. and Western Digital Corp. tumbled as their forecasts underwhelmed investors.

The passage of vessels belonging to the US, Israel, and other hostile countries through Hormuz will be prohibited, Fars news agency reported, citing details of the Iran-Oman drafted deal. Meantime, the Houthis attacked Saudi-backed forces in Yemen, triggering fears about a region-wide conflict.

President Donald Trump defended Pete Hegseth after a report about a disagreement over dwindling US weapons stockpiles raised questions about the Pentagon chief’s future in the administration.

Those geopolitical risks resurfaced at a time when some Fed officials are pushing to boost rates to tamp down price pressures. The latest round of data continued to reflect labor-market resilience, reinforcing the assumption that inflation will drive the September central bank decision, said Vail Hartman at BMO Capital Markets.

“Near-term risks remain, especially if US data stay firm, oil prices keep inflation concerns alive, or markets continue to price in a more hawkish Federal Reserve rate path,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.

Employers in the US likely stepped up their pace of hiring in July, showing a steady appetite for workers despite the overhang of elevated inflation. Economists estimate the monthly jobs report on Friday will show an 80,000 increase in payrolls after the lower-than-expected 57,000 gain in June.

“Friday’s jobs report is of greater importance for markets given how fast this stock market has rallied over the past week, and ultimately we will need to see a number that is not too hot and not too cold in order for the market to keep grinding higher,” said Clark Bellin at Bellwether Wealth.

Applications for unemployment benefits were little changed, remaining below 200,000 for a third straight week. A separate report showed labor productivity accelerated at a faster-than-expected pace in the second quarter as employers sought to mitigate higher costs.

“The labor market is holding up well in the face of elevated interest rates and AI productivity gains,” Bellin noted. “We are still seeing plenty of companies hold onto their labor force even as AI investments take hold.”

Corporate Highlights:

Alphabet Inc. has received about $115 billion of orders for its latest jumbo bond sale, signaling renewed investor appetite for debt tied to the artificial-intelligence boom after a recent selloff. DoorDash Inc. issued a profit forecast that topped analysts’ expectations, citing a boom in paying subscribers who tend to order takeout and groceries more frequently than non-members. Honeywell Aerospace Inc.’s unexpected reduction in its outlook startled investors just weeks after the supplier began operating as an independent company. Peloton Interactive Inc. gave a revenue forecast for the fiscal 2027 year that disappointed investors, marking the latest setback for the fitness technology company. Fiserv Inc. slashed its full-year profit outlook, sending shares slumping as analysts called the revised forecast a “disappointing outcome.” Some of the main moves in markets:

Stocks

The S&P 500 fell 0.2% as of 1:10 p.m. New York time The Nasdaq 100 fell 0.2% The Dow Jones Industrial Average fell 0.7% The MSCI World Index fell 0.2% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1522 The British pound was little changed at $1.3459 The Japanese yen fell 0.5% to 158.46 per dollar Cryptocurrencies

Bitcoin fell 0.2% to $64,678.42 Ether fell 0.1% to $1,913.82 Bonds

The yield on 10-year Treasuries advanced five basis points to 4.67% Germany’s 10-year yield advanced three basis points to 3.14% Britain’s 10-year yield advanced five basis points to 4.94% Commodities

West Texas Intermediate crude rose 3.4% to $77.74 a barrel Spot gold was little changed ©2026 Bloomberg L.P.