Oil Leaps, Stocks Fall on War and Credit Fears: Markets Wrap
(Bloomberg) — A weak jobs report hit stocks at a time when a widening war in the Middle East is lifting oil prices and fueling inflation jitters. Renewed anxiety about the private-credit industry also curbed risk appetite. Bitcoin tumbled.
The S&P 500 lost 1.5%, set for its worst week since October. Financial shares sank, with BlackRock Inc. down 7.8% after curbing withdrawals from a private-credit fund. Oil topped $90. Short-dated bonds outperformed as traders slightly boosted bets on Federal Reserve rate cuts. Chipmakers slumped as Oracle Corp. and OpenAI scrapped plans to expand a flagship artificial intelligence data center in Texas.
With no sign of a let-up in hostilities in the Middle East, the conflict is unleashing a wave of disruption across energy markets and sparking concerns about price pressures. Even before the war on Iran, Fed officials have been more attuned to inflation. But the latest data on jobs can change their focus.
Nonfarm payrolls fell 92,000 last month, one of the largest declines since the pandemic. While some of the downside was expected, like a temporary dent from striking healthcare workers and a potential hit from bad weather, a wide array of industries cut jobs. The unemployment rate rose to 4.4%.
The unexpected hiring slump threatens to upend the prevailing view among policymakers that a stabilizing labor market will allow them to keep rates steady as they fight persistent inflation.
A negative payrolls number combined with a jump in oil prices will have traders worrying about stagflation risks, according to Brian Jacobsen at Annex Wealth Management.
“Today’s numbers may have put the Fed between a rock and a hard place,” said Ellen Zentner at Morgan Stanley Wealth Management. “Significant weakening in the labor market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled to remain on the sidelines.”
The yield on 10-year Treasuries was little changed at 4.14% while that on two-year notes declined two basis points to 3.56%.
Fed Governor Christopher Waller said on Bloomberg TV he doesn’t expect the war to have a sustained impact on inflation. Fed Bank of San Francisco President Mary Daly told CNBC that job weakness shows risks persist.
While the jobs report precedes the Iran conflict, the spike in oil prices raises the probability of stronger energy inflation, according to Andy Schneider at BNP Paribas.
“Modest increases in oil prices, even if sustained, have transitory effects on US headline inflation and minimal effects on US core inflation,” said Michael Gapen at Morgan Stanley. “The Fed can look through these increases, but with inflation above target as long as it has been, even modest oil price pressures could delay rate cuts.”
Absent second-round effects or rising inflation expectations, he says Fed hikes have a high bar. A substantial rise in oil prices could weaken activity, acting like an uncertainty shock and putting rate cuts in play, Gapen noted.
If the labor market keeps losing steam, it becomes a more delicate backdrop — especially with geopolitical uncertainty on the rise and energy prices capable of acting as an added tax at the gas pump, according to Bret Kenwell at eToro.
“This may not change the Fed’s decision this month, but a visibly weakening jobs market is the kind of trend that can pull the Fed in a more dovish direction as 2026 unfolds,” he said. “Regardless of interest rates, a deteriorating jobs market is not what investors want to see.”
Corporate Highlights:
Oracle Corp. and OpenAI have scrapped plans to expand a flagship artificial intelligence data center in Texas after negotiations dragged over financing and OpenAI’s changing needs. Boeing Co. is closing in on one of the largest sales in its history, a 500-aircraft order for 737 Max jets set to be unveiled when Trump travels to Beijing for his first state visit to China since 2017, people familiar with the matter said. What Bloomberg strategists say…
“Inflation concerns stemming from higher oil prices — as a result of the Iran conflict — overwhelmed the prospect of further easing to support the economy. Following Friday’s data, growth worries are diluting some of that focus.” — Kristine Aquino, Managing Editor, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 1.5% as of 3:35 p.m. New York time The Nasdaq 100 fell 1.7% The Dow Jones Industrial Average fell 1.1% The MSCI World Index fell 1.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1597 The British pound rose 0.2% to $1.3380 The Japanese yen fell 0.2% to 157.95 per dollar Cryptocurrencies
Bitcoin fell 4.7% to $67,811.2 Ether fell 5.3% to $1,970.46 Bonds
The yield on 10-year Treasuries was little changed at 4.14% Germany’s 10-year yield advanced two basis points to 2.86% Britain’s 10-year yield advanced nine basis points to 4.63% Commodities
West Texas Intermediate crude rose 12% to $90.59 a barrel Spot gold rose 1.4% to $5,151.88 an ounce ©2026 Bloomberg L.P.
