Wall Street slides as Houthi attacks push oil higher

Wall Street slid again on Friday as climbing oil prices revived inflation worries less than a week before the Federal Reserve's next rate decision. The selling followed a tech rout and a rush into bonds on Thursday. Brent crude touched its highest level since late April after new Houthi attacks in Saudi Arabia, Reuters reported. That pushed the S&P 500 ↗ 0.71% toward a second straight weekly loss.bloomberg.com

On Friday, the price of oil, not AI, drove the losses. In late-morning trading, the Dow Jones Industrial Average dropped about 1%, and three out of four stocks in the S&P 500 fell, the Associated Press reported. The Nasdaq Composite held up better as Micron Technology ↗ 2.98% and Microsoft ↗ 1.54% rose. Energy companies Chevron ↘ 0.51% and ConocoPhillips ↗ 0.38% gained. Caterpillar ↗ 0.75% and American Express ↗ 0.58% declined. Bloomberg said the oil rally pulled down both stocks and bonds as investors looked ahead to the Fed decision.reuters.com+1

AI doubts and a bond rally

On Thursday, the S&P 500 fell 1.2%, its worst day since July, and the Nasdaq dropped 2.6%, according to AP. Meta Platforms ↘ 1.88% fell after reporting its first cash outflow in more than a decade because of AI spending, Reuters reported. Nvidia ↗ 2.39% and Lam Research ↗ 3.22% also declined. Investors moved into Treasuries, and the 10-year yield had its biggest one-day drop since March 2023, falling back below 5%. "US Treasury bonds are — gasp — working as your hedge again," wrote Charlie McElligott of Nomura.reuters.com+1

Asian markets extended the losses on Friday. Japan's Nikkei 225 fell 1.3% and South Korea's Kospi fell 1.7%, Reuters reported. An index of mainland Chinese blue chips hit its lowest level since July 2025. The Kospi later recovered from a drop of as much as 4.1% to close higher, according to Bloomberg.swissinfo.ch+1

Gulf escalation and the Fed

Saudi Aramco ordered staff to evacuate its Dhahran headquarters as fighting with Yemen's Iran-aligned Houthis intensified, Reuters reported. The Houthis have claimed attacks on the Saudi Defence Ministry in Riyadh and on an Aramco site in Yanbu, The National reported.reuters.com+1

The Fed is expected to announce its decision on Wednesday, October 28, and to leave rates unchanged, RTTNews reported. Traders still see a December rate hike as likely. Fed watchers will also see the PCE price index next week, which is expected to show 3.6% inflation for September, AP reported. Alphabet ↘ 0.97%, Microsoft and Amazon Amazon.com, Inc. ↗ 0.44% are also due to report earnings.wgauradio.com+1

"The question is whether selling accelerates or markets stage another familiar reversal," said Chris Weston of Pepperstone, as quoted by Reuters.reuters.com