U.S. stocks slipped Thursday as surging oil prices drove bond yields higher and lifted bets that the Federal Reserve’s next move could be a rate hike. WTI crude climbed back above $90 a barrel and Brent topped $100, and a drop in Alphabet added to the pressure.
Wall Street pulled back Thursday as a jump in oil prices lifted bond yields and revived the prospect of higher interest rates. According to CNBC’s Investing Club, the move in oil and its impact on yields is what is weighing on the market.
The pressure started in commodities. WTI crude climbed back above $90 a barrel and Brent topped $100 as the conflict in the Middle East continued.
Higher energy costs stoked inflation fears and pushed bond prices lower. That sent the yield on the 10-year Treasury to 4.70%, its highest level since January 2025.
Markets still see the Fed holding rates steady at next week’s meeting, but the odds of a hike at the following meeting are climbing fast. Traders now price a roughly 83% chance of a September hike, up from 53% a week earlier, according to the CME FedWatch tool.
Alphabet added to the market’s troubles after reporting negative free cash flow in the second quarter and raising its full-year capital spending outlook. The results raised concerns that hyperscalers are not earning an adequate return on the capital they are pouring into the AI buildout.
Its shares fell more than 6%, on pace for their worst day of the year.
Attention now turns to Intel’s results after the closing bell, with American Express, Verizon, Charter Communications, SLB and HCA Healthcare due Friday.
Source: CNBC
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