Major US stock indexes declined as renewed tensions between the US and Iran pushed oil prices higher, while Treasury yields continued their ascent. The S&P 500 fell 0.9% to 7673.11, the Nasdaq Composite dropped 1.13% to 26763.19, and the Dow Jones Industrial Average decreased 0.78% to 51426.18. This market movement was largely attributed to concerns that elevated energy costs would fuel inflation and necessitate additional Federal Reserve rate hikes.
Brent crude oil rose to around $107.86 a barrel, up 3.4%, as talks to revive the Strait of Hormuz faced a stalemate. Concurrently, the yield on 10-year Treasuries advanced 8.25 basis points to 5.26%, reaching nearly a two-decade high, while the 30-year bond yield climbed 7.4 basis points to 5.576%. Investors are now pricing in about a 70% probability of another Federal Reserve rate hike next month.
Despite the broader market downturn, Nvidia Corp. saw its shares rise by about 2% after announcing a record $150 billion increase to its share buyback plan. However, other software companies experienced declines following Meta Platforms Inc.'s introduction of Meta Enterprise Platform. Analysts like Chris Larkin at E*Trade from Morgan Stanley noted that the market struggles to gain traction due to rising yields and oil prices, emphasizing the Federal Reserve's focus on inflation. Matt Maley at Miller Tabak added that with earnings season weeks away, the focus remains on oil prices and economic data.
