Wall Street falls for third straight session on oil spike, rising yields

The main US stock benchmarks ended lower for a third consecutive session, weighed down by climbing crude prices, a rise in Treasury yields and persistent worries over inflation. Traders are awaiting Thursday’s Producer Price Index release at 8:30 AM, followed by the more closely watched Consumer Price Index on Friday. Together, the data points will help analysts estimate the PCE inflation gauge, the Federal Reserve’s preferred measure.

Brent crude topped $100 a barrel, hitting an intraday peak of $101.64, as heightened tensions in the Middle East stoked fears of supply disruptions. West Texas Intermediate crude also surged, approaching $97. Rising energy costs could add to inflationary pressures, complicating the policy outlook for the Fed as it prepares for this week’s US inflation numbers.

Treasury yields advanced after the Treasury announced a $6 billion bond-buyback operation. While that figure exceeded the prior $2 billion amount, some market participants had anticipated a larger intervention. The 10-year yield climbed to as high as 4.85%, adding another headwind for equities.

Closing levels were as follows:

• Dow Jones Industrial Average dropped 405.04 points, or 0.77%, to 52,386.25
• S&P 500 fell 37.16 points, or 0.48%, to 7,636.37
• Nasdaq Composite declined 168.07 points, or 0.64%, to 26,253.34
• Russell 2000 slid 38.97 points, or 1.32%, to 2,921.23
• Nasdaq 100 lost 86.15 points, or 0.29%, to 29,421.55

The Russell 2000 was the weakest performer among the main indexes. Smaller companies are generally more exposed to rising borrowing costs, so the increase in yields hit that index hardest.

The Nasdaq 100 outperformed the broader market, supported by a 6.55% gain in Meta after it unveiled its Muse AI agent. The tool is designed to go beyond a simple chatbot: rather than just explaining how to complete a task, Muse can execute the task itself. For instance, a user could ask it to plan a vacation, search for flights, make reservations and add the trip to a calendar. It can also send emails, shop online, fill out forms and monitor items such as ticket availability, even after the app is closed. The advantage is that it saves users time, but it also requires access to personal data and other applications. Consequently, users will need to understand what permissions they grant Muse and retain control, especially before it transmits information or spends money. Still, that strength was insufficient to keep the index from closing in negative territory.

Apple held its annual product event on Wednesday, headlined by the launch of the iPhone Duo, the company’s first foldable phone. The device opens to a 7.6-inch screen, starts at $1,999 and ships in October. Apple also unveiled the iPhone 18 Pro and Pro Max, with improved cameras, extended battery life and expanded Apple Intelligence features. Other products included the Apple Watch Series 12 and Ultra 4, which offer enhanced health and AI capabilities, along with AirPods 5 with better noise cancellation and real-time translation. The event marked the first major product presentation led by new CEO John Ternus, who succeeded Tim Cook. Apple shares ended nearly flat, down 0.28%.

Despite the tech news, the combination of oil above $100, Treasury yields near multi-year highs and three straight days of equity declines is a cautionary signal. The next major catalysts are the US Producer Price Index on Thursday and the Consumer Price Index on Friday. Higher-than-expected inflation readings could keep yields elevated and sustain the defensive tone in stocks. By contrast, softer inflation could reduce pressure on the Fed to tighten policy in September.