Stocks Fall as US-Iran Strikes Spur Rally in Oil: Markets Wrap
(Bloomberg) — A flare-up in geopolitical risks sent stocks and bonds lower as oil climbed, raising concerns about inflationary pressures that could make the Federal Reserve raise interest rates.
Escalating tensions in the Middle East drove US crude near $86, with the rise in energy costs lifting Treasury 10-year yields to the highest since January 2025. The S&P 500 trimmed its August advance.
The US and Iran exchanged strikes for the first time in about a month as American forces hit an island in the Strait of Hormuz and the Islamic Republic responded by launching attacks on the United Arab Emirates and Jordan.
Fresh hostilities dashed hopes for a Hormuz traffic normalization, with elevated oil prices reinforcing bets on higher rates after Fed Chair Kevin Warsh reiterated a commitment to bring down inflation. While much hinges on employment and inflation figures, money markets see a hike as more likely than not in September.
“With traders tracking geopolitical volatility as well as potential seasonal volatility, it will be interesting to see which market impulse from last week might carry over to this week,” said Chris Larkin at E*Trade from Morgan Stanley. “Unexpectedly strong labor-market data might be taken as bad news by the market, since it could reinforce expectations for a rate hike.”
The August US payrolls data is expected to be consistent with general steadiness in the labor market that’s helping the Fed focus more intently on its battle with inflation.
Friday’s jobs report “will be critical,” with data on consumer prices, due on Sept. 11, being the more important of the two prints, given Warsh’s view that US is at full employment, said JPMorgan Chase & Co.’s Andrew Tyler. He’s shifted to a “tactically cautious” view on US stocks for the next few weeks, but expects a strong backdrop will persist amid economic data and earnings.
On Tuesday, the calendar flips to a historically tough month for equities. While the S&P 500 bucked the seasonal trend in the past two years, the index has lost 0.8% on average in Septembers over the past three decades, data compiled by Bloomberg show. That makes it the worst month of the year and in stark contrast to an average 0.9% gain for the other 11 months.
“Ugh, here comes September,” said Anthony Saglimbene at Ameriprise. “September has historically delivered the calendar’s largest single-month drops when other market dynamics are going south, but roughly flat-to-positive outcomes when market and economic conditions are more normal.”
That makes September seasonality weakness a risk to be aware of in the context of other market dynamics, but not necessarily a month investors want to consistently avoid stocks, he added.
Corporate Highlights:
Nvidia Corp. is investing $3.5 billion in MediaTek Inc., deepening collaboration with the Taiwanese chipmaker at a time when it’s working to persuade more companies to build chips that plug into its dominant data center ecosystem. The US Federal Trade Commission and 22 US states sued Amazon.com Inc. over claims the e-commerce giant systematically overcharged advertisers for years. California’s new bill to revamp the state’s wildfire response rejected Governor Gavin Newsom’s efforts to protect utilities from insurance claims arising from such disasters, sparking a rout in PG&E Corp. and Edison International shares. Intercontinental Exchange Inc. and Cboe Global Markets Inc. fell on a news report that Hyperliquid Labs is in advanced talks to bring its perpetual futures to US traders through Kraken’s parent company Payward. SLB Ltd. agreed to acquire German cooling equipment maker Kelvion Inc. from investors including Apollo Global Management Inc. for $3.4 billion in cash, deepening its push into data center services. What Bloomberg Strategists say…
“Higher yields are scary for stocks, but history helps ease some of that anxiety. The 4% to 5% yield range we’re seeing now has typically been associated with strong equity performance.”
—Tatiana Darie, 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 4 p.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average fell 0.7% The MSCI World Index fell 0.4% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.3% to $1.1617 The British pound was little changed at $1.3550 The Japanese yen rose 0.2% to 159.74 per dollar Cryptocurrencies
Bitcoin rose 0.5% to $78,957.84 Ether fell 0.4% to $2,481.01 Bonds
The yield on 10-year Treasuries advanced four basis points to 4.76% Germany’s 10-year yield advanced five basis points to 3.32% Britain’s 10-year yield advanced three basis points to 5.06% Commodities
West Texas Intermediate crude rose 3.1% to $85.95 a barrel Spot gold was little changed ©2026 Bloomberg L.P.
