Markets Mixed as Middle East Tensions Drive Oil Surge, Bond Yields Higher

The S&P 500 Index ($SPX) (SPY) closed Wednesday down 0.28%, the Dow Jones Industrial Average ($DOWI) (DIA) fell 1.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) edged up 0.27%. September E-mini S&P futures (ESU26) declined 0.35%, while September E-mini Nasdaq futures (NQU26) rose 0.19%.

Stock indexes finished mixed as the Nasdaq rebounded from a 3.5-week low. Broad market sentiment remained fragile after crude prices and bond yields spiked following President Trump’s declaration that the ceasefire with Iran is over. The president characterized the truce as “a waste of time” after U.S. forces struck Iranian targets in retaliation for attacks on commercial vessels transiting the Strait of Hormuz.

Equities pared earlier losses, with the Nasdaq 100 moving into positive territory, led by a recovery in semiconductor and AI infrastructure names that recouped some of Tuesday’s sell-off.

Markets hit session lows and crude prices surged to session highs after President Trump signaled further strikes on Iran and raised the possibility of a renewed blockade of Iranian ports. The escalation pushed West Texas Intermediate crude up more than 4% to a two-week high, lifting inflation expectations and driving the 10-year Treasury yield to a 1.5-month peak of 4.59%.

Minutes from the June 16–17 FOMC meeting struck a hawkish tone, noting that “participants generally assessed that information received over the intermeeting period suggested that upside risks to price stability remained elevated while downside risks to achieving maximum employment had moderated a bit.”

U.S. MBA mortgage applications fell 2.2% in the week ended July 3, with the purchase index down 0.6% and the refinance index dropping 4.1%. The average 30-year fixed mortgage rate ticked up one basis point to 6.58%.

Strong second-quarter earnings expectations provide a supportive backdrop. Bloomberg Intelligence forecasts Q2 earnings growth of approximately 23%, near Q1’s 30% surge—which more than doubled the 12% analysts had projected. AI-related spending is expected to drive the bulk of gains, with AI infrastructure stocks projected to contribute nearly 60% of the S&P 500’s earnings-per-share growth in the quarter.

WTI crude (CLQ26) jumped over 4% to a two-week high after U.S. strikes hit more than 80 targets in Iran following Iranian attacks on shipping in the Strait of Hormuz. The revocation of an Iran oil-sanctions waiver late Tuesday further tightened supply concerns.

Fed-funds futures imply a 31% probability of a 25-basis-point rate hike at the July 28–29 FOMC meeting.

Overseas markets declined broadly. The Euro Stoxx 50 fell to a 3.5-week low, down 1.82%. China’s Shanghai Composite slipped 0.49% to a 3.5-week low, and Japan’s Nikkei 225 dropped 2.11% to a three-week low.

Interest Rates

September 10-year T-notes (ZNU6) closed down 10.5 ticks, pushing the 10-year yield up 2.4 basis points to 4.575%. The contract hit a 1.5-month low, with the yield touching 4.595% intraday. Wednesday’s crude-oil surge amplified inflation expectations, pressuring Treasurys. The 10-year breakeven inflation rate climbed to a two-week high of 2.280%. The hawkish FOMC minutes added further downward pressure on note prices.

T-notes recovered off lows after a well-bid $39 billion 10-year Treasury auction drew a bid-to-cover ratio of 2.59, above the ten-auction average of 2.49.

European sovereign yields rose sharply. The 10-year German bund yield advanced 9.9 basis points to 3.092%, touching a 1.5-month high of 3.093%. The 10-year U.K. gilt yield jumped 12.6 basis points to 4.974%, reaching a 1.5-month high of 4.981%.

ECB Governing Council member and Bundesbank President Joachim Nagel said another ECB rate increase cannot be ruled out given the Iran escalation. Swaps price a 21% chance of a 25-basis-point ECB hike at the July 23 policy meeting.

U.S. Stock Movers

Homebuilders and building-material suppliers came under pressure as the 10-year yield spiked, a headwind for housing demand. Builders FirstSource (BLDR) and PulteGroup (PHM) fell more than 5%; D.R. Horton (DHI) and Toll Brothers (TOL) dropped over 4%; Lennar (LEN) and KB Home (KBH) declined more than 3%; and Home Depot (HD) slipped over 2%.

Airline and cruise-line shares slid after WTI crude surged more than 7%. American Airlines (AAL), Alaska Air (ALK), and Carnival (CCL) each fell over 3%. Norwegian Cruise Line (NCLH) dropped more than 2%, while United Airlines (UAL), Delta Air Lines (DAL), and Southwest Airlines (LUV) declined over 1%.

Software names weighed on the broader market. Workday (WDAY) fell more than 4%; Intuit (INTU) and Atlassian (TEAM) dropped over 3%; ServiceNow (NOW), Thomson Reuters (TRI), and Autodesk (ADSK) declined more than 2%; and Salesforce (CRM), Microsoft (MSFT), and Palantir (PLTR) slipped over 1%.

Energy producers and service companies rallied on the crude-price jump. Valero Energy (VLO) gained more than 6%; Baker Hughes (BKR), Marathon Petroleum (MPC), and Phillips 66 (PSX) rose over 5%; Occidental Petroleum (OXY), APA Corp (APA), Halliburton (HAL), and Diamondback Energy (FANG) advanced more than 3%; and ConocoPhillips (COP), Devon Energy (DVN), and SLB (SLB) climbed over 2%.

Semiconductor and AI infrastructure stocks rebounded from Tuesday’s sell-off. The iShares Semiconductor ETF (SOXX) rose more than 2%. SanDisk (SNDK) jumped over 6%; Broadcom (AVGO) gained over 4%; Nvidia (NVDA) climbed more than 3% to lead Dow gainers; and Seagate (STX), Western Digital (WDC), and NXP Semiconductors (NXPI) each rose over 3%. KLA Corp (KLAC), Texas Instruments (TXN), and Lam Research (LRCX) added more than 2%.

Ollie’s Bargain Outlet (OLLI) fell over 9% after JPMorgan downgraded the stock to neutral from overweight.

Lemonade (LMND) dropped more than 8% following a Morgan Stanley downgrade to equal-weight from overweight with a $75 price target.

Bath & Body Works (BBWI) declined over 6% after Goldman Sachs downgraded to sell from neutral with a $19 price target.

Navitas Semiconductor (NVTS) slid more than 4% after Wolfspeed filed a patent-infringement lawsuit alleging multiple Navitas products infringe its patents.

PayPal (PYPL) fell over 2% after Barclays initiated coverage with an underweight rating and a $42 price target.

TeraWulf (WULF) surged more than 12% after Morgan Stanley raised its price target to $72 from $66.50 following the Anthropic lease deal.

Beazer Homes (BZH) jumped over 12% after Dream Finders Homes submitted an all-cash acquisition proposal at $32 per share.

Dell Technologies (DELL) rose more than 3% after Evercore ISI lifted its price target to $500 from $450.

Earnings Reports (7/9/2026)

Immersion Corp (IMMR), Nurix Therapeutics (NRIX), PepsiCo (PEP), Simply Good Foods (SMPL), Simulations Plus (SLP), WD-40 Co (WDFC).

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