S&P 500 Drops 0.6% as Oil Hits $101.59 and Yields Jump
US equities fell on Wednesday as Brent crude rose to $101.59 and the 10-year Treasury yield climbed to 5.05% following strong business data.
Key points
- The S&P 500 fell 0.6% as Brent crude oil rose 2.4% to $101.59 per barrel.
- The 10-year Treasury yield jumped to 5.05% following a report showing strong business activity growth.
- KB Home and General Mills both reported profits above expectations, but their stocks declined.
U.S. stocks declined on Wednesday as oil prices rose and bond yields spiked. The S&P 500 dropped 0.6% to sit 1.1% below its recent record. The Dow Jones Industrial Average lost 87 points, or 0.2%. The Nasdaq composite fell 1.1% from its all-time high.
Brent crude oil increased 2.4% to $101.59 per barrel. This move reversed a week of falling prices. The cost remains well above the roughly $72 level seen before the Iran conflict began. These higher fuel costs are fueling inflation concerns across the market.
Bond yields climb on strong data
The 10-year Treasury yield jumped to 5.05% from 4.96% late Tuesday. This move was driven by a preliminary report on business activity. It showed growth at its strongest level in more than five years. Higher yields make borrowing more expensive for consumers and companies.
Business costs are rising at the fastest rate in four years. Chris Williamson of S&P Global Market Intelligence notes this is partly due to fuel. Companies may pass these costs to customers. This could worsen inflation in the coming months.
Corporate earnings face headwinds
KB Home reported stronger quarterly profits than analysts expected. Its stock still slipped 1% after earnings. The executive chairman said housing conditions got tougher in the last three months. Higher mortgage rates linked to Treasury yields are making buyers more cautious.
General Mills also beat profit expectations for the latest quarter. However, higher costs reduced its profit per dollar of revenue. The company expects growth to fall below its historical track record this fiscal year. Its stock fell 1.6% following the announcement.
Global markets track US trends
Stock indexes slipped across much of Europe and Asia. In Hong Kong, indexes fell 1% on Wednesday. Shanghai saw a 0.4% decline ahead of state visits. Chinese President Xi Jinping begins a visit to Washington on Wednesday. He is scheduled to meet President Donald Trump this week.
