Stocks Decline as US-Iran Clashes Drive Oil Higher: Markets Wrap

(Bloomberg) — A renewed advance in oil sent stocks lower as bond yields rose on concern that an escalation of hostilities between the US and Iran will hinder prospects for a peace deal, with elevated energy costs fueling inflation risks.

As equities fell from a record, the S&P 500 snapped a nine-day winning run. An ETF tracking software firms slid 4.3%. US crude settled near $96. Higher oil prices and signs of labor-market strength fueled losses in Treasuries amid bets the Federal Reserve’s next rate move will be a hike. Bitcoin sank. In late hours, Broadcom Inc.’s outlook failed to inspire investors.

The US and Iran clashed overnight, with Kuwait and Bahrain caught in the crossfire of one the most serious flare-ups since a ceasefire went into effect in early April.

The developments follow days of rising tension, including over Israeli operations against Hezbollah in Lebanon, that threatens to derail US-Iran talks. The sides have agreed on a rough framework that should extend their truce and reopen the Strait of Hormuz, though negotiations over the final details are dragging on.

“Ongoing tensions in the Middle East continued to cloud the broader risk backdrop,” said Fawad Razaqzada at Forex.com. “Fresh exchanges between US and Iranian forces overnight raised questions about the durability of the ceasefire arrangement.”

Even as businesses face the fastest growth in input costs in nearly four years, data showed services activity picked up in May. A gauge of new orders increased, underscoring resilient consumer demand.

In the run-up to Friday’s payrolls report, data showed companies added the most jobs since January 2025, signaling the labor market may be gaining momentum despite higher energy costs. If confirmed in official government figures, the trend could support a shift toward bets the Fed is more likely to raise rates in the months ahead.

“If incoming US data continue to surprise positively, investors may increasingly express a more hawkish Fed view through renewed dollar strength, particularly against lower- and zero-yielding currencies and commodities like the Japanese yen and gold,” Razaqzada noted.

Fed Bank of Dallas President Lorie Logan said officials may need to hike later this year to bring inflation back to target. Separately, her New York counterpart John Williams told Yahoo Finance he sees no obvious direction ahead for rates.

Employment remained stable in recent weeks as inflation continued to rise across much of the country, driven primarily by the impact of war on energy prices, according to the Fed’s Beige Book survey of regional business contacts.

Corporate Highlights:

Alphabet Inc. upsized its equity raise to $84.75 billion from the $80 billion it announced just two days earlier in a bid to help fund growing artificial intelligence spending plans. Meta Platforms Inc. is selling businesses access to an AI agent for the first time, its latest effort to generate revenue to offset the company’s hefty investments. Broadcom Inc. delivered a forecast for the current period that disappointed investors, signaling that AI-fueled sales are growing more slowly than some had anticipated. CrowdStrike Holdings Inc. projected revenue figures that were broadly in line with analysts’ estimates as concern continues to mount in government and industry over the threat of hackers armed with powerful AI tools. SpaceX is planning to offer shares at $135 apiece to raise $75 billion in its ⁠initial public offering, according to people familiar with the matter, as Elon Musk rejects another Wall Street convention by setting a fixed price ahead of the marketing phase of the deal. Some of the main moves in markets:

Stocks

The S&P 500 fell 0.7% as of 4 p.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average fell 1.2% The MSCI World Index fell 0.7% Currencies

The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.3% to $1.1598 The British pound fell 0.3% to $1.3420 The Japanese yen fell 0.1% to 160.08 per dollar Cryptocurrencies

Bitcoin fell 3.3% to $65,273.51 Ether fell 5.4% to $1,801.54 Bonds

The yield on 10-year Treasuries advanced five basis points to 4.49% Germany’s 10-year yield advanced six basis points to 3.04% Britain’s 10-year yield advanced seven basis points to 4.93% Commodities

West Texas Intermediate crude rose 2.7% to $96.29 a barrel Spot gold fell 1.1% to $4,439.63 an ounce ©2026 Bloomberg L.P.