Stocks Fall as US-Iran Worries Spur Rally in Oil: Markets Wrap

(Bloomberg) — A flare-up in geopolitical risks sent stocks and bonds lower as oil jumped, fueling inflation worries before 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 to $83 in late hours. Higher energy costs stoked concerns the Federal Reserve will have to raise rates. The S&P 500 fell for a second straight day. Memory companies Sandisk Corp. and Western Digital Corp. sank as their forecasts underwhelmed investors. The dollar rose.

Iran will seek to bar US and Israeli ships from the Strait of Hormuz and require compensation from hostile countries before they’re allowed to use it, according to local media reports on a proposed Iran-Oman deal to manage the crucial waterway.

Separately, Fars news agency said Iranian naval forces had struck “hostile targets” at the entrance to the strait.

Those geopolitical tensions resurfaced at a time when some Fed officials are pushing to boost interest rates to tamp down price pressures.

“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.

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.

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. is set to raise $25 billion from a bond sale after generous yield payouts helped secure one of the year’s largest order books for AI-related debt. President Donald Trump has signed an order imposing tariffs on imported polysilicon used in semiconductors and solar panels in a bid to reduce US reliance on foreign supplies that threatens national security. Peloton Interactive Inc. gave a revenue forecast for the fiscal 2027 year that disappointed investors, marking the latest setback for the fitness technology company. Sweetgreen Inc. cut its annual outlook after warning that diners are eating less fresh prepared foods following the cyclospora outbreak. Airbnb Inc. boosted its annual revenue forecast for a second time this year after it saw robust global travel demand, particularly in the US and Europe. Lyft Inc.’s second-quarter bookings beat expectations, thanks to growing demand for premium rides and strength in European markets, while net income missed estimates. 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 fell 0.4% The Dow Jones Industrial Average fell 0.9% The MSCI World Index fell 0.2% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1524 The British pound was little changed at $1.3455 The Japanese yen fell 0.4% to 158.42 per dollar Cryptocurrencies

Bitcoin fell 0.5% to $64,476.46 Ether fell 0.4% to $1,908.79 Bonds

The yield on 10-year Treasuries advanced five basis points to 4.66% 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 3.3% to $77.73 a barrel Spot gold was little changed ©2026 Bloomberg L.P.