US Stocks Slip as Oil Hits $101.59 and Bond Yields Rise
S&P 500 drops 0.6% after Brent crude rises 2.4% to $101.59. Strong business data pushes 10-year Treasury yield to 5.05%.
Key points
- Brent crude oil prices rose 2.4% to $101.59 per barrel on Wednesday, reversing a weekly decline.
- The 10-year US Treasury yield increased to 5.05% from 4.96% following strong business activity data.
- KB Home and General Mills both reported better-than-expected profits, but their stocks fell 1% and 1.6% respectively.
US stocks fell on Wednesday as oil prices rose. Brent crude climbed 2.4% to $101.59 per barrel. This reversal halted a week of price declines. Investors also reacted to strong US business data.
The S&P 500 index dropped 0.6% during the session. It now sits 1.1% below its recent record. The Nasdaq composite fell 1.1% from its all-time high. The Dow Jones Industrial Average lost 87 points, or 0.2%.
Oil prices drive bond yields higher
Brent oil costs $101.59, far above the $72 pre-war level. The rise stems from ongoing tensions with Iran. Mediators continue talks, but no concrete deal exists yet. Higher energy costs feed directly into inflation fears.
The 10-year Treasury yield jumped to 5.05% from 4.96%. This move reflects the surge in oil prices. It also follows a report showing strong business activity. Higher yields make borrowing more expensive for households and firms.
Strong data raises inflation concerns
A preliminary report showed US business activity at a five-year high. Costs for businesses are rising at the fastest rate in four years. Chris Williamson of S&P Global cites expensive fuel as a key driver. Companies may pass these costs to consumers soon.
The Federal Reserve raised rates last week for the first time in three years. Fed Governor Michael Barr said more adjustments are likely. He aims to ensure inflation returns to target quickly. The 10-year yield had topped 5% for the first time since 2023 last week.
Corporate earnings face rising headwinds
KB Home beat profit expectations but its stock fell 1%. Executive chairman Jeffrey Mezger noted tougher housing conditions. Higher mortgage rates have made potential customers more cautious. Geopolitical uncertainty adds to the economic pressure.
General Mills also reported stronger profits than analysts expected. However, higher costs reduced its profit per dollar of revenue. The company expects growth to fall below its historical track record. Its stock declined 1.6% following the announcement.
