- The Dow fell 0.79%, the S&P 500 declined 0.71%, and the Nasdaq 100 dropped 1.29% as rising oil prices lifted inflation expectations and bond yields.
- The global bond sell-off pushed the UK 10-year gilt yield to 5.25%, the German 10-year Bund yield to 3.36%, the Japanese 10-year JGB yield to 3.00%, and the U.S. 10-year Treasury yield to 4.80%.
- Fresh U.S.-Iran hostilities raised concerns about energy-flow disruptions through the Strait of Hormuz, while the implied probability of a September Fed rate hike rose to 66.4%.
- U.S. August ISM manufacturing, July construction spending, and July JOLTS job openings were weaker than expected, adding a growth concern to the inflation and rates shock.
Quotes
“Stocks fell Tuesday while rising oil prices pushed bond yields higher, a bumpy start to the month as investors fear renewed fighting in Iran could inflate prices and convince the Fed to hike interest rates.”
“Investors are demanding higher yields to hold bonds as concerns intensify over persistent inflation, government spending, and surging corporate borrowing to finance the AI buildout.”