Stocks slide as oil tops $100 and bond yields hit 18-month high

A confluence of surging oil prices, rising Treasury yields, and geopolitical turmoil sent equity markets tumbling on Thursday, July 23, as investors confronted the prospect of prolonged inflation driven by the widening U.S.-Iran conflict. Brent crude breached the symbolically important $100-per-barrel mark for the first time since late May after reports of attacks on oil tankers in the Red Sea, triggering a sell-off that rippled from Wall Street to Asia and Europe.english.news+2

Wall Street Slumps on Oil and Earnings Jitters

The S&P 500 fell 1.2% and the Nasdaq Composite dropped 2.2% in their worst single-day performances since late June, according to CNBC. The Dow Jones Industrial Average shed more than 500 points, or roughly 1%. Megacap technology stocks led the decline after Alphabet ↗ 0.24% and Tesla ↘ 2.08% reported capital expenditure plans that spooked investors already nervous about AI valuations, according to Yahoo Finance.finance.yahoo+1

The 10-year U.S. Treasury yield rose four basis points to 4.71%, its highest level since January 2025, as CNN reported that investors demanded higher compensation for the risk that oil-driven inflation would erode their returns. The 30-year yield climbed above 5.16%.cnbc+2

ECB Holds Rates, Warns on Energy

The European Central Bank held its three key interest rates unchanged at its July 23 meeting, keeping the deposit rate at 2.25%. ECB President Christine Lagarde warned that "uncertainty remains high and the full inflationary impact of the energy shock has yet to play out," according to Bloomberg. Markets are pricing in an 85% probability of a rate hike at the September meeting, according to analysis from Morningstar.global.morningstar+3

The FTSE 100 fell 0.73% on Thursday, according to historical data from Investing.com.investing

Yen at Multidecade Lows, Dollar Strengthens

The Japanese yen plunged past 163 per dollar earlier in the week, reaching levels not seen since December 1986, as reported by the Straits Times. Japanese Finance Minister Katayama warned of possible further intervention after authorities have already spent $92.9 billion defending the currency. The dollar strengthened alongside rising yields, with the U.S. Dollar Index trading above 101 — its highest level since May 2025.straitstimes+1

The sell-off in Asian markets earlier in the week, driven by semiconductor valuations and geopolitical risk, set the tone for further losses, with the Nikkei 225 and Kospi both under pressure as oil prices climbed. As CNN noted, the war with Iran has fundamentally altered expectations for central banks worldwide, with traders now expecting the Federal Reserve to hold rates or even hike at its meeting concluding July 29.economymiddleeast+2