US Stocks Fall as Oil Prices Surge and Yields Reach Multiyear Highs
US stocks fell for a fourth consecutive day, their longest streak since June, as rising oil prices and inflation data weighed on investor sentiment. The S&P 500 Index dropped 0.6% to its lowest level since July, while the Nasdaq 100 Index shed 1.1%. West Texas Intermediate crude oil surged around 7% to about $103 a barrel, the highest since May.
Treasury yields rose across maturities, with 10-year rates topping 4.9%, a multiyear high. The increase in yields was partly driven by the US government's decision to purchase less 10- to 20-year securities than investors anticipated in its first expanded buyback operation.
Analysts pointed out that a hot US producer price index print and European Central Bank President Christine Lagarde's hawkish comments suggest a global central bank rate-hike cycle may be imminent, which would not support risk assets. Investors are looking ahead to Friday's report on US consumer prices, which will help set expectations for next week's Fed decision.
Traders have boosted expectations for a hike next week to about 70% and fully priced in a move by October. Economists say that yields and oil need to come down for stocks to recover, possibly if Friday's inflation data comes in softer than expected.