Stocks and Bonds Fall as Crude Oil Surges

The S&P 500 Index ($SPX) (SPY) is down -0.25% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.12%.  E-mini S&P futures (ESU26) are down -0.92%, and September E-mini Nasdaq futures (NQU26) are up +0.11%.

Stock indexes are sliding today, with the Dow Jones Industrial Average falling to a 5-week low.  The broader market is under pressure for a second day amid mounting inflation risks. WTI crude oil prices are up more than +3% today to a 3.25-month high amid escalating hostilities in the Middle East, heightening concerns about energy flows through the Strait of Hormuz. The surge in energy prices is boosting inflation expectations and pushing bond yields higher.  The 10-year T-note yield rose to 4.85% today, the highest in 2.75 years.  The higher bond yields are weighing on stocks.

On the positive side, strength in chipmakers and AI-infrastructure stocks supports the Nasdaq 100 index.  Energy producers are also climbing today on stronger crude oil prices.

Also, an escalating trade war between the US and Canada is weighing on market sentiment.  On Tuesday, Canada imposed tariffs of 15% to 50% on hundreds of US goods in retaliation for the US action last month to impose 50% tariffs on $20 billion of imports from Canada.  The US responded by moving to block imports of some Canadian products and slapping new tariffs on others, as well as seeking to bar Canadian companies from selling to US government contractors. 

US MBA mortgage applications fell -2.7% in the week ended September 4, with the purchase mortgage sub-index down -0.2% and the refinancing mortgage sub-index down -6.2%.  The average 30-year fixed-rate mortgage rose +6 bp to a 14-month high of 6.85% from 6.79% in the prior week.

Oct WTI crude oil prices (CLV26) are up more than +3% today at a 3.25-month high due to the latest escalation of hostilities in the Middle East.  The US destroyed five Iranian tankers carrying crude in response to two attempts by Iran to hit US Navy ships with ballistic missiles.  Iran responded by firing missiles at a US air base in Jordan and warning ships in the Persian Gulf that they would be attacked.  

The markets are discounting a 62% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are mixed today.  The Euro Stoxx 50 fell to a 5-week low and is down -1.65%. China's Shanghai Composite closed up +0.28%.  Japan's Nikkei-225 Stock Average closed down -0.19%.

Interest Rates

December 10-year T-notes (ZNZ6) are down by -6 ticks today.  The 10-year T-note yield is up +2.8 bp to 4.830%.  T-notes fell to a 20-month nearest-futures low today, and the 10-year T-note yield rose to a 2.75-year high of 4.849%.  T-notes are under pressure from higher crude oil prices, which are boosting inflation expectations, as WTI crude oil is up more than +3% to a 3.25-month high.  Supply pressures are also weighing on T-note prices as the Treasury will auction $39 billion in 10-year T-notes later today.  T-notes added to their losses today after the Treasury announced that it will buy back up to $6 billion in longer-dated US Treasuries, below expectations of at least $10 billion.

European government bond yields are moving higher today.  The 10-year German bund yield climbed to a new 15-year high of 3.433% and is up +6.4 bp to 3.430%.  The 10-year UK gilt yield is up +7.5 bp to 5.248%.

French July manufacturing production unexpectedly fell -0.8% m/m, weaker than expectations of a +0.4% m/m increase.

Markets are discounting a 100% chance of a +25 bp ECB rate hike at Thursday’s policy meeting.

US Stock Movers

Chipmakers and AI-infrastructure stocks are moving higher today, a positive factor for the overall market.  Marvell Technology (MRVL) is up more than +5%, and Advanced Micro Devices (AMD) and Micron Technology (MU) are up more than +3%.  Also, ARM Holdings (ARM), Western Digital (WDC), and SanDisk (SNDK) are up more than +2%.  In addition, Intel (INTC) and Qualcomm (QCOM) are up more than +1%.

Energy producers and service providers are moving higher today, with WTI crude up more than +3% at a 3.25-month high.  APA Corp (APA) is up more than +2%, and ExxonMobil Holdings (XOM), Occidental Petroleum (OXY), ConocoPhillips (COP), and SLB Ltd (SLB) are up more than +1%.  Also, Chevron (CVX) is up more than +1% to lead gainers in the Dow Jones Industrials. 

ServiceTitan (TTAN) is down more than -30% after reporting a Q2 EPS loss of -26 cents, a bigger loss than the consensus of -25 cents.

Casy’s General Stores (CASY) is down more than -14% to lead losers in the S&P 500 after reporting a Q1 gross margin of 21.8%, below the consensus of 22.3%. 

Chewy (CHWY) is down more than -7% after forecasting a sequential decline in Q3 gross margin, due to a timing shift as certain rebate benefits shifted from the second half of the year into Q2.

Smithfield Foods (SFD) is down more than -6% after cutting its Q3 earnings outlook, citing “continued compression in the industry fresh pork market spread and lower hog prices.”

Booking Holdings (BKNG) is down more than -4% to lead losers in the Nasdaq 100 after losing an EU court fight over its takeover of Sweden’s Etraveli Group, when a judge said regulators were right to conclude that the planned buyout threatened fair competition. 

Dyne Therapeutics (DYN) is down more than -2% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $10.

Meta Platforms (META) is up more than +6% to lead gainers in the S&P 500 and Nasdaq 100 after analysts reported positive reviews of the company’s debut of Muse, an AI assistant.

Chime Financial (CHYM) is up more than +5% after boosting its full-year revenue forecast to $2.76 billion to $2.77 billion from a previous forecast of $2.73 billion to $2.75 billion, stronger than the consensus of $2.74 billion.

Dell Technologies (DELL) is up more than +3% after Evercore ISI raised 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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