Oil Prices Surge, Higher Yields Weigh on US Stocks
US stocks slipped on Thursday as traders priced in a higher chance of another Federal Reserve rate hike. The catalyst for this move was a combination of two inflation-sensitive signals, including new filings for unemployment benefits falling to 197,000 and US crude oil (WTI) climbing 4.1% to $95.90 a barrel.
The global benchmark Brent also rose 4% to $107.23 after Bloomberg reported renewed supply worries tied to Iran and Houthi attacks in Saudi Arabia's region.
This led traders to lift their expectations for higher interest rates, with the CME FedWatch tool now showing a 70% chance of a quarter-point hike in October, up from 11% a month ago.
The 10-year Treasury yield rose to 5.16%, its highest since 2007, effectively tightening financial conditions by raising borrowing costs across the economy.