Stocks Plummet as Oil Prices Soar and Inflation Worries Grow

Stock markets in both the US and Canada saw significant declines on Monday as oil prices continued to rise, pushing up Treasury yields. The price of crude oil has been increasing due to uncertainty over a potential Iran war peace deal, with President Donald Trump rejecting an offer from Iran but indicating that talks may continue. This has fanned inflation worries, leading to higher interest rates.

According to Jack Ablin, chief investment strategist at Cresset Capital Management, 'Iran is driving oil prices, and oil prices are driving inflation, and inflation is driving interest rates.' He noted that this marks a shift in the market, with interest rates now looking attractive compared to equities. The yield on 30-year US Treasury bonds hit its highest level since mid-May 2004, while 10-year yields touched their highest since mid-June 2007.

The Dow Jones Industrial Average fell 347.11 points, or 0.67%, to 51,481.51, while the S&P 500 lost 59.72 points, or 0.77%, to 7,683.69. Boeing shares plummeted 6.9% after the US Federal Aviation Administration delayed certification of its 737 MAX 10 due to a software issue.

Nvidia bucked the trend with a 1.6% gain after announcing a $150 billion share repurchase authorization. The company's move was seen as a vote of confidence in the stock. Expectations for an interest rate hike from the Federal Reserve at its October meeting have climbed, with markets pricing in a 70.3% chance for an increase of at least 25 basis points.