Oil tops $105, dragging US stocks to fourth straight loss
Brent crude exceeded $105 per barrel for the first time since May. This surge pushed the S&P 500 down 0.6%, marking a fourth consecutive session of losses.
Brent crude surpassed the $105 per barrel mark on Thursday. This is the first time the price has hit this level since May. The S&P 500 index fell by 0.6% in response. The Dow Jones Industrial Average dropped 296 points. The Nasdaq composite index declined by 0.8%. These moves confirm a broad market sell-off driven by energy costs.
US benchmark crude oil rose by 3.7% during the session. It briefly crossed the $100 threshold. This level had not been seen since before Memorial Day. The price jump reflects ongoing disruptions in global supply chains. The Strait of Hormuz remains a focal point for trade restrictions. Hopes for a rapid diplomatic resolution with Iran have dimmed. President Trump stated that prices may not fall until after the November elections.
Inflation data accelerates to 5.4%
Wholesale inflation in the United States rose to 5.4% last month. This is an increase from 4.8% in July. Consumer prices for regular gasoline averaged nearly $4.28 per gallon. This represents a 34% increase from the previous year. Retailers face pressure to pass these costs to shoppers. A consumer inflation report is scheduled for release on Friday.
The Federal Reserve is expected to respond to these figures. Traders now estimate a 70% probability of a rate hike next week. This estimate increased from 61% the previous day. The European Central Bank also raised its interest rates on Thursday. Both central banks cited the Middle East conflict as a source of inflationary pressure.
Treasury yields climb to 4.91%
The yield on the 10-year US Treasury bond increased to 4.91%. It was at 4.83% late Wednesday. This level matches yields from the autumn of 2023. The previous low was 3.97% before the conflict began. Higher yields make bonds more attractive than stocks. This shift reduces demand for riskier equity assets.
Corporate earnings face supply headwinds
Macy’s shares fell by 2.7% despite better-than-expected profits. The retailer raised its annual earnings forecasts. It issued a warning regarding rising input costs. Transportation expenses are a major component of these costs. Trucking fuel prices directly impact logistics budgets. This trend is evident across various sectors of the economy.
GN auto markets/bonds: bond market data confirms the tightening financial conditions. The combination of high oil prices and rising rates creates a challenging environment. Investors are re-evaluating their positions in equities. The focus shifts to fixed-income instruments for stability. The market awaits further clarity on the geopolitical situation.
