Oil surge past $100 drives global stocks to multi-week lows

A convergence of surging oil prices and hotter-than-expected U.S. inflation data hammered global stocks and bonds on Thursday, September 10, pushing major indexes to multi-week lows and driving Treasury yields to levels not seen in nearly three years.

Oil Shock Revives Inflation Fears

WTI crude surged more than 6% to settle above $102 a barrel, while Brent crude briefly topped $108 — both reaching their highest levels since May — as escalating attacks on shipping routes tied to the U.S.-Iran conflict raised fears of prolonged supply disruptions. Saudi Arabia told OPEC that its August crude production fell to 6.238 million barrels per day, the lowest since 1990, adding further pressure.tradingview+2

The oil spike has pushed the average price of regular gasoline in the United States to nearly $4.28 per gallon, up roughly 34% from a year earlier, according to AAA. President Donald Trump said Wednesday that oil prices likely would not come down until after the November midterm elections.bnnbloomberg

Inflation Data and Rate Hike Bets

The Bureau of Labor Statistics reported that U.S. producer prices rose 0.4% month-over-month and 5.4% year-over-year in August, slightly above the consensus forecast of 5.3%. The data reinforced concerns that elevated energy costs are keeping inflation sticky ahead of the Federal Reserve's September 15-16 policy meeting.investing+1

Traders lifted the probability of a 25-basis-point Fed rate hike next week to roughly 73%, up from about 61% the day before, according to the CME FedWatch Tool. The European Central Bank also raised its deposit rate by 25 basis points to 2.50% on Thursday, citing ongoing inflation pressures from "the conflict in the Middle East".tradingview+2

The benchmark 10-year Treasury yield climbed 12 basis points to 4.96%, its highest level in about three years. The 10-year UK gilt yield soared to a 19-year high of 5.38%, and the 10-year German bund yield hit a 17-year high of 3.51%.marketwatch+1

"Everybody is selling everything," said Tom di Galoma, a managing director at Mischler Financial Group. Treasury Secretary Scott Bessent's buyback of roughly $5.2 billion in long-dated government bonds fell short of market expectations and failed to stem the rout.marketwatch

Broad Market Damage

The S&P 500 fell 0.6% to close at 7,591.70, while the Dow Jones Industrial Average dropped 316 points, or 0.6%, to 52,064.10, and the Nasdaq Composite sank 0.7%. All three indexes posted a fourth consecutive daily decline and closed at five-week lows.bnnbloomberg

In Canada, the S&P/TSX Composite fell 400.28 points, or 1.1%, to 35,506.28, its lowest close in nearly six weeks. "What's worrying people is pressure on inflation," said Michael Sprung, president at Treegrove Investment Management. "The oil prices plus inflation are putting pressure towards more raising rates than not".reuters

Chipmakers and AI-infrastructure stocks took heavy losses, with CoreWeave ↘ 0.15%, Intel ↗ 2.61%, and Lam Research ↗ 0.40% each falling more than 5%. Apple ↗ 1.75% bucked the trend, rising more than 3% after analysts responded positively to its newly unveiled foldable iPhone Duo.tradingview+1

Attention now turns to Friday's U.S. consumer price report, which will offer a further test of inflation expectations before the Fed's decision next week.investing+1