Stocks Tumble as Crude Oil Prices Soar and Bond Yields Rise

The stock market is under pressure today due to rising crude oil prices, which have boosted bond yields and complicated the US inflation outlook. The S&P 500 Index has fallen by -0.42%, while the Dow Jones Industrial Average has dropped by -0.55%. E-mini S&P futures are down -0.40% and September E-mini Nasdaq futures are down -0.18%. Crude oil prices surged after the US and Iran exchanged strikes for the first time in about a month, with WTI crude oil up more than +2%. The 10-year T-note yield has risen to a 19-month high of 4.75%.

Fed Chair Warsh's hawkish comments last Friday have contributed to the market's volatility, increasing the chances of a Fed rate hike next month to 64%. Meanwhile, Chinese economic news was mixed after China's August manufacturing PMI rose +0.6 to 49.8, stronger than expectations.

However, Q2 earnings results have been positive, with 86% of S&P 500 companies beating estimates. The S&P 500 is tracking for earnings growth of almost 32%, well above projections. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.

Airlines and cruise line operators are falling today due to higher fuel costs, while energy producers and service providers are moving higher. SLB Ltd and Halliburton have surged by more than +4%, followed by Devon Energy and Diamondback Energy at over +3%. Chevron is up more than +2% to lead gainers in the Dow Jones Industrials.