Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on Aug. 24, 2026 in New York City.
Angela Weiss | AFP | Getty Images
Stocks dropped Thursday after U.S. oil prices topped $100 a barrel, amid growing fears of higher inflation from a prolonged war in the Middle East.
The Dow Jones Industrial Average closed down 316.56 points, or 0.6%, to 52,064.10. The S&P 500 fell 0.58% to end at 7,591.70, while the Nasdaq Composite slid 0.65% to 26,081.72. It was the fourth consecutive day of declines for the major averages.
Higher oil prices continued to weigh on sentiment, as the war between the U.S. and Iran stretched into a seventh month. U.S. West Texas Intermediate closed at $102.48, up 6.7%. Brent crude futures gained 5.9% to settle at $107.63. It was the highest close since May 19 for both benchmarks.
Since the Iran war began at the end of February, WTI is up 52.9%, and it’s up by 78.5% year-to-date.
Thursday’s jump in oil prices pushed the 10-year Treasury yield above 4.95% for the highest level since October 2023.
High beta chip stocks that have led the bull market traded lower on fears higher rates and oil could slow the economy. Intel slid 5.6%, and Micron Technology fell 4.7%.
Hyperscalers Alphabet and Microsoft finished up on the day by less than 1%, and Apple shares surged 3.6% following a successful launch of the company’s first foldable smartphone.
WTI, 1-day
A tame wholesale inflation report failed to allay fears coalescing around higher rates and oil prices. August’s producer price index, a measure of wholesale inflation, rose a seasonally adjusted 0.4% for the month, in line with the Dow Jones consensus. On an annual basis, that put PPI at 5.4%, which is still well above the Fed’s 2% inflation target.
The report comes ahead of the closely watched consumer price index on Friday. Both numbers feed into the Fed’s primary inflation gauge, the personal consumption expenditures price index, which won’t be released until after the Fed’s interest rate vote Sept. 16.
“The PPI release itself was inconclusive, in that doesn’t really help to settle the question of ‘hike or no hike’ from the Fed next week, but WTI oil prices surging back above $100 and Treasury yields hitting new highs is certainly raising the stakes for investors ahead of tomorrow’s crucial CPI report,” wrote Stephen Coltman, head of macro at 21shares.
Fed funds futures were last pricing in a 73% likelihood of a quarter point hike following the conclusion of next week’s meeting, according to the CME FedWatch Tool.
The Treasury Department completed a buyback of $5.19 billion of $6 billion in long-dated Treasuries on Thursday in an effort to manage yield curves as energy prices soar due to the Iran war.
The major averages are coming off a losing day following the Treasury Department’s announcement of the $6 billion buyback – triple the usual amount. Less than a month ago, the Treasury said it would more than double the size of its $2 billion government debt repurchases.
— CNBC’s Jeff Cox and Spencer Kimball contributed to this report.
