Stocks Fall as Oil Surge Boosts Treasury Yields: Markets Wrap
(Bloomberg) — A renewed spike in oil prices combined with data showing labor-market resilience lifted Treasury yields as stocks fell amid reduced odds of Federal Reserve interest-rate cuts. Bitcoin sank.
The slide in bonds put two-year yields on pace for their biggest four-day surge since October 2024 as higher energy costs fuel inflation worries. Brent topped $84 as the Middle East conflict disrupted flows to key buyers. The S&P 500 erased its previous session’s advance.
Markets have been rocked by the war, which entered its sixth day with no immediate prospect of a resolution in sight. It has boosted oil, gas, and product prices, lifting freight rates, and spawning a wave of disruption for producers and importers.
As inflation expectations build, traders have pared bets on Fed easing. Swaps are pricing in less than 40 basis points of cuts in 2026, compared with 60 basis points at the end of last week.
In the run-up to the payrolls report, data showed jobless claims are settling near some of the lowest levels seen in the last year, signaling a low-firing environment. Meantime, layoff announcements at US companies subsided in February.
The employment report due Friday is expected to show that hiring moderated last month after an unexpectedly strong reading in January, and the unemployment rate held steady.
“In the setup for tomorrow’s payrolls report, the market will take its cues from moves in the energy sector and any challenge to the stability seen in risk assets,” said Ian Lyngen at BMO Capital Markets.
The S&P 500 fell 0.9%. The yield on 10-year Treasuries climbed five basis points to 4.14%. The dollar added 0.6%. West Texas Intermediate topped $79.
Read: How Iran War Is Disrupting Global Oil and Gas Supply: QuickTake
Fed Bank of Richmond President Tom Barkin said the central bank’s response to the war will depend on how long the impact on the US economy lasts.
Assuming the conflict is resolved over the coming weeks, the spike in oil will likely prove transitory, with Brent trading back down to the forward curve strip price of around $65, according to Chris Senyek at Wolfe Research.
“If the equilibrium for oil settles in higher, there is clearly still upward pressure on the 10-year yield,” he said.
Higher oil prices raise the risk of another breakdown in stock-bond correlations, but bonds can still diversify equity risk, according to Morgan Stanley strategists including Serena Tang.
“If a sustained oil shock could push growth lower and inflation higher, we may see a repeat of the 2021–2023 environment when stocks and bonds sold off together,” they said.
Whether short- or long-duration bonds provide better diversification depends on whether inflation risks or growth concerns dominate going forward, the strategists concluded.
Corporate Highlights:
Broadcom Inc. Chief Executive Officer Hock Tan said the company expects its AI chip sales to top $100 billion next year. Amazon.com Inc.’s cloud unit is launching AI tools for medical practices. Morgan Stanley is eliminating about 3% of its global workforce, targeting investment-banking and trading businesses as well as the wealth and asset-management operations. Berkshire Hathaway Inc. CEO Greg Abel said he will use all of his take-home pay to acquire the conglomerate’s stock for as long as he’s in the role. Abel said the conglomerate has no immediate plans to alter its stake in Kraft Heinz Co. after the food company paused its plans to split in two. Kroger Co. offered a soft forecast for the full year as the largest US supermarket operator seeks to stabilize operations under its new top boss. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.9% as of 11:23 a.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average fell 1.6% The Stoxx Europe 600 fell 1.2% The MSCI World Index fell 0.9% Currencies
The Bloomberg Dollar Spot Index rose 0.6% The euro fell 0.6% to $1.1565 The British pound fell 0.5% to $1.3304 The Japanese yen fell 0.4% to 157.75 per dollar Cryptocurrencies
Bitcoin fell 3.1% to $71,069.49 Ether fell 3.6% to $2,072.29 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.14% Germany’s 10-year yield advanced 10 basis points to 2.85% Britain’s 10-year yield advanced 11 basis points to 4.55% Commodities
West Texas Intermediate crude rose 6.6% to $79.57 a barrel Spot gold fell 1.3% to $5,072.69 an ounce ©2026 Bloomberg L.P.
