Amid concerns that the war between the United States and Iran could drag on, international oil prices topped $100 a barrel. As inflationary pressure intensified and U.S. Government Bonds yields surged, the three major New York stock indexes fell for the fourth straight trading day.
On the 10th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average closed at 52,064.10, down 316.56 points (0.60%) from the previous day.
The Standard & Poor's (S&P) 500 index fell 44.66 points (0.58%) to 7,591.70, and the tech-heavy Nasdaq composite lost 171.62 points (0.65%) to close at 26,081.72.
A sharp rise in international oil prices weighed on stocks. West Texas Intermediate (WTI) for October delivery settled at $102.48 a barrel, up $6.43 (6.69%) from the previous session. Brent crude for November delivery rose $6.42 (6.34%) to $107.63.
Both WTI and Brent crude hit their record high since May 19. WTI rose for eight straight trading days, extending its longest winning streak in three years.
Fears that the war between the United States and Iran will drag on and disrupt oil supplies pushed prices higher. The Wall Street Journal (WSJ) reported that senior aides to President Donald Trump are internally considering the possibility that the war could continue until the end of Trump's term in 2029.
As concerns grew that rising oil prices could push inflation back up, U.S. Government Bonds yields also jumped. The 10-year Government Bonds yield topped 4.95% intraday, the highest level since October 2023. The market is even discussing the possibility of breaking above 5%.
The 30-year Government Bonds yield closed at 5.360%, up 7.5 basis points (1 bp = 0.01 percentage point) from the previous day. It was the highest since June 29, 2004.
The 2-year Government Bonds yield, which is sensitive to monetary policy changes, rose 12.2 basis points to 4.548%. It posted the biggest one-day jump since March and climbed to the highest level in about two years.
The U.S. producer price index (PPI) for August, released the same day, also fueled inflation worries. According to the Bureau of Labor Statistics at the Department of Labor, August PPI rose 0.4% from the prior month and 5.4% from a year earlier. Diesel prices surged 24.1% in a month, highlighting the impact of rising energy prices.
With international oil prices and producer prices rising together, expectations strengthened that the Federal Reserve (Fed) could raise the benchmark rate at next week's Federal Open Market Committee (FOMC) meeting.
Bill Adams, U.S. chief economist at Fifth Third Commercial Bank, said, "The surge in energy prices in September is likely to tip the scales toward a rate hike at next week's Fed meeting."