Equities and Bonds Decline as Crude Oil Prices Surge on Geopolitical Tensions

Major stock indices finished lower on Thursday, with the Dow Jones Industrial Average sliding to a five-week low. The broader market experienced its second consecutive day of selling pressure as rising inflation concerns took center stage. Compounding these fears, WTI crude oil prices surged more than 3% to reach a 3.25-month high, driven by escalating geopolitical tensions in the Middle East. The rapid increase in energy costs has amplified inflation expectations, driving bond yields higher and subsequently weighing on equity valuations. The benchmark 10-year Treasury note yield climbed to 4.85%, marking its highest level in nearly three years.

Despite the broader market downturn, the Nasdaq 100 index managed to edge higher, supported by robust performance in semiconductor and artificial intelligence infrastructure stocks. Energy producers also posted solid gains, capitalizing on the upward momentum in crude oil prices.

Market sentiment was further dampened by an intensifying trade dispute between the United States and Canada. In response to US tariffs imposed on $20 billion of Canadian imports last month, Canada introduced retaliatory tariffs ranging from 15% to 50% on hundreds of American goods. The United States countered by moving to block certain Canadian imports, imposing additional tariffs, and seeking to exclude Canadian companies from federal contracting opportunities.

According to the Mortgage Bankers Association, US mortgage applications decreased by 2.7% for the week ending September 4. The purchase index fell by 0.2%, while the refinancing index dropped by 6.2%. Concurrently, the average interest rate on a 30-year fixed-rate mortgage rose by 6 basis points to 6.85%, reaching a 14-month high.

October WTI crude oil futures rose over 3% to a 3.25-month high, reacting to the latest escalation of hostilities in the Middle East. The conflict intensified after the US military destroyed five Iranian tankers carrying crude oil, retaliating for two Iranian ballistic missile attempts targeting US Navy vessels. In turn, Iran launched missiles at a US airbase in Jordan and issued warnings that vessels in the Persian Gulf would be targeted.

Financial markets are currently pricing in a 62% probability of a 25 basis point interest rate hike at the upcoming Federal Open Market Committee (FOMC) meeting scheduled for September 15–16.

Global equity markets presented a mixed performance. The Euro Stoxx 50 index fell to a five-week low, down 1.65%, while China’s Shanghai Composite closed up 0.28%. Japan’s Nikkei-225 average declined by 0.19%.

Interest Rates

December 10-year Treasury note futures fell by 6 ticks, pushing the 10-year yield up 2.8 basis points to 4.830%. The notes hit a 20-month low in nearest-futures trading, and the yield peaked at a 2.75-year high of 4.849%. The upward pressure on Treasury notes stems from surging crude oil prices, which stoke inflation fears, alongside supply concerns as the Treasury prepared to auction $39 billion in 10-year notes. Additionally, yields climbed after the Treasury announced a repurchase program of up to $6 billion in longer-dated US Treasuries, falling short of the expected $10 billion.

European government bond yields climbed across the board. The 10-year German bund yield reached a fresh 15-year high of 3.433%, up 6.4 basis points to 3.430%. Meanwhile, the 10-year UK gilt yield rose 7.5 basis points to 5.248%.

French manufacturing production unexpectedly contracted by 0.8% month-over-month in July, significantly underperforming the consensus estimate of a 0.4% increase.

Markets are fully pricing in a 25 basis point rate hike by the European Central Bank (ECB) at Thursday’s policy meeting.

US Stock Movers

Semiconductor and AI-related equities advanced, providing a bright spot for the market. Marvell Technology (MRVL) surged over 5%, while Advanced Micro Devices (AMD) and Micron Technology (MU) gained more than 3%. ARM Holdings (ARM), Western Digital (WDC), and SanDisk (SNDK) also climbed over 2%. Intel (INTC) and Qualcomm (QCOM) finished with gains exceeding 1%.

Energy companies continued to climb, tracking the rise in crude oil. APA Corp (APA) rose more than 2%, and ExxonMobil (XOM), Occidental Petroleum (OXY), ConocoPhillips (COP), and SLB Ltd (SLB) each gained over 1%. Chevron (CVX) also rose more than 1%, leading the top performers on the Dow Jones Industrial Average.

ServiceTitan (TTAN) plunged over 30% after reporting a second-quarter loss per share of 26 cents, missing the consensus estimate of a 25-cent loss.

Casy’s General Stores (CASY) dropped more than 14% to lead S&P 500 losers after reporting a first-quarter gross margin of 21.8%, below the 22.3% consensus.

Chewy (CHWY) fell over 7% after forecasting a sequential decline in third-quarter gross margin, attributed to a timing shift where certain rebate benefits were recognized in the second half of the year rather than the second quarter.

Smithfield Foods (SFD) declined over 6% after cutting its third-quarter earnings outlook, citing persistent compression in the fresh pork market spread and lower hog prices.

Booking Holdings (BKNG) fell over 4%, leading Nasdaq 100 losers following an EU court ruling that upheld regulators’ decisions blocking its acquisition of Sweden’s Etraveli Group, citing threats to fair competition.

Dyne Therapeutics (DYN) dropped over 2% after JPMorgan Chase downgraded the stock to underweight from neutral, setting a price target of $10.

Meta Platforms (META) jumped over 6% to lead the S&P 500 and Nasdaq 100 higher, following positive analyst feedback on the launch of its new AI assistant, Muse.

Chime Financial (CHYM) rose over 5% after raising its full-year revenue forecast to between $2.76 billion and $2.77 billion, up from the previous range of $2.73 billion to $2.75 billion, beating the consensus estimate of $2.74 billion.

Dell Technologies (DELL) gained over 3% after Evercore ISI increased its price target on the stock to $650 from $575.

Earnings Reports (9/9/2026)

AeroVironment Inc (AVAV), Chewy Inc (CHWY), Cooper Cos Inc/The (COO), Core & Main Inc (CNM), SailPoint Inc (SAIL), Sunbelt Rentals Holdings Inc (SUNB).

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