Stocks Fall as Hormuz Standoff Spurs Rally in Oil: Markets Wrap
(Bloomberg) — A standoff between the US and Iran lifted oil prices, dragging down stocks and bonds after clashes over the Strait of Hormuz raised concerns about a disruption in energy supplies that could fuel inflation.
Those worries halted back-to-back gains in the S&P 500, which also fell amid a selloff in chipmakers. Brent crude briefly topped $80 as President Donald Trump said the US would reinstate its blockade and demanded a 20% reimbursement for traffic through the waterway. Treasury yields climbed on bets that price pressures will force the Federal Reserve to raise rates.
Trump said “the process and formation” of his plan “will begin immediately.” The White House did not immediately provide other details on the proposal, including how it would be administered or whether it had been communicated to US allies. The comments intensify a spat between the US and Iran over whether the critical shipping corridor is open for traffic.
The flare-up in geopolitical risks comes at a time when traders are gearing up for the start of the earnings season, with markets growing uneasy over whether the enormous sums being poured into artificial intelligence will pay off.
“The ongoing swings in semiconductors has made it difficult for tech to mount a sustained push to the upside, and while the market has so far taken the breakdown of the US-Iran ceasefire in stride, escalating hostilities and rising oil prices won’t help the bullish cause,” said Chris Larkin at E*Trade from Morgan Stanley.
“Headline inflation numbers are expected to cool this week, but the market may not get as much of a boost from good news if traders think oil is headed higher again,” noted Larkin.
The recent drop in gasoline prices likely helped drag down the consumer price index. The gauge due Tuesday is expected to show its first monthly decline since the onset of the pandemic in 2020. Still, Wednesday’s producer price index could underscore upstream pressures continuing to build.
During both days, Kevin Warsh will make his first appearances before Congress as Fed chairman. Several other officials are also slated to speak this week.
Meantime, the second-quarter earnings season kicks off Tuesday, with reports from big banks. Analysts expect S&P 500 firms to post a 23% jump in profits, according to data compiled by Bloomberg Intelligence, which would be among the best readings ever outside of recoveries from major recessions.
US stocks beyond the technology giants are poised to report strong earnings this season, broadening the equity rally, according to Morgan Stanley strategists led by Michael Wilson.
Corporate Highlights:
An AI-fueled stock rout in South Korea spilled over into the US market Monday, as SK Hynix Inc. American depositary shares tumbled, underscoring growing investor concerns that the boom is overextended. Meta Platforms Inc. has committed to spending an additional $40 billion on its sprawling data center campus in Louisiana, pushing its total expected investment beyond $250 billion for the site as it continues to grow its artificial-intelligence computing footprint. Intel Corp. is spending €5 billion ($5.7 billion) to expand its plant in Ireland, as the chipmaker attempts to regain its manufacturing dominance for the AI boom. Taiwan Semiconductor Manufacturing Co. reported a 36% jump in quarterly sales, meeting elevated expectations while signaling global demand for AI computing remains intact. Walt Disney Co. shares have been in a slump for years, but Wells Fargo Securities said there’s one possible move that could reverse the trend: ditching its streaming-video business. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.3% as of 11:04 a.m. New York time The Nasdaq 100 fell 1% The Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 was little changed The MSCI World Index fell 0.3% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1402 The British pound fell 0.2% to $1.3375 The Japanese yen fell 0.4% to 162.38 per dollar Cryptocurrencies
Bitcoin fell 2.4% to $62,646.22 Ether fell 2.4% to $1,777.69 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.59% Germany’s 10-year yield advanced three basis points to 3.10% Britain’s 10-year yield advanced eight basis points to 4.96% Commodities
West Texas Intermediate crude rose 4.3% to $74.49 a barrel Spot gold fell 2.6% to $4,013.32 an ounce ©2026 Bloomberg L.P.
