Rising oil prices amid the ongoing conflict with Iran have pressured long-term bond yields and also impacted stock markets ahead of the Fed’s September policy meeting.
- Brent crude futures expiring in November were up nearly 2.5% to trade at $107.20 a barrel, while WTI crude futures expiring in October were trading at $102.49 per barrel.
- The U.S. 10-year Treasury yield was trading at 4.977% at the time of writing, hitting 2007 levels, while the U.S. 30-year Treasury yield was trading at 5.367%, touching levels last seen in 2002.
- Traders are pricing in an 86.5% chance of a rate hike by a quarter-percentage point in September, according to data from the CME FedWatch tool.
U.S. stock futures declined in the overnight session late Sunday as concerns over an industrywide split over the pace of artificial intelligence development and rising oil prices weighed on markets ahead of the Federal Reserve’s September policy meeting scheduled for later this week.
Dow futures fell 0.04%, while the S&P 500 and the Nasdaq-100 fell 0.42% and 1.11% respectively at 11:07 PM EDT.
On Friday, all three benchmark indexes ended the session higher. The Dow Jones Industrial Average led the climb, adding more than 509 points to end the session nearly 1% higher. The Nasdaq Composite and S&P 500 gained 0.96% and 0.86% at close, respectively.
| Index | Move | Close |
| Dow Jones Industrial Average | 0.98% | 52,573.29 |
| S&P 500 | 0.86% | 7,656.98 |
| Nasdaq Composite | 0.96% | 26,333.04 |
However, all three benchmark indexes ended the week lower.
The Dow lost more than 1.5% last week, while the S&P 500 declined 0.80% and the Nasdaq Composite fell 0.66% amid rising oil prices and surging bond yields.
Key US Market Drivers
Last week, U.S. markets were largely driven by AI-related concerns and soaring oil prices and bond yields amid the escalating tensions in the Middle East.
Multiple AI leaders warned about the risks of rapid development. Anthropic CEO Dario Amodei laid out a three-step plan on Saturday to slow the pace of development, to buy more time to address the risks. OpenAI CEO Sam Altman and SpaceX CEO Elon Musk also backed Amodei, saying AI required more oversight. However, the chief executives of Microsoft and Meta Platforms opposed slowing down, revealing a split in Big Tech’s stance on the hottest sector powering its rally this year.
Altman also said over the weekend that OpenAI would not go public this year amid AI safety concerns.
However, U.S. President Donald Trump dismissed the concerns, saying, “We could put guardrails. We can do this and that. But I think you have a lot of very negative forces that are bringing it up that shouldn't be bringing it up, and they're bringing up things that won't happen."
Meanwhile, rising oil prices amid the ongoing conflict with Iran have pressured long-term bond yields and also impacted stock markets.
Oil prices have crossed $100 a barrel for the first time since May. At the time of writing, Brent crude futures expiring in November were up nearly 2.5% to trade at $107.20 a barrel, while WTI crude futures expiring in October were trading at $102.49 per barrel, up 2.44%.
Long-term bond yields have also been climbing over the past week amid rising inflation concerns, even after the U.S. Department of the Treasury said last week it will triple its upcoming debt buyback plan to $6 billion. The U.S. 10-year Treasury yield was trading at 4.977% at the time of writing, hitting 2007 levels, while the U.S. 30-year Treasury yield was trading at 5.367%, touching levels last seen in 2002.
Meanwhile, markets are watching for the Federal Reserve's interest rate decision later this week. Traders are pricing in an 86.5% chance of a rate hike by a quarter-percentage point in September, according to data from the CME FedWatch tool. This is considerably higher than the 59.4% chance recorded last week.
“This week’s Federal Reserve policy meeting may well be the trickiest in years. Ironically, it’s less about what’s happening in the economy and more about a sudden shift in rate-hike expectations, driven by the surge in yields ... that has less to do with the Fed and more to do with the growing ex-ante imbalance between demand for bond financing and its supply,” said Mohamed El-Erian, the chief economic adviser at Allianz, in a post on X.
However, Economist Peter Schiff said in a post on X last week, “Traders now believe if the Fed hikes rates next week, long-term bond yields will fall, as the hike will improve the Fed's inflation-fighting credibility. But the expected hike will be far too little to win the inflation fight, so long-term yields will rise regardless of a hike.”
The Federal Open Market Committee (FOMC) meeting is scheduled for Sept. 15–16.
Trending Stocks To Watch
RUM Group Inc. (RUM): Shares of the AI video-sharing platform and neocloud firm surged more than 19% overnight late Sunday after a media report claimed that the unnamed AI customer in its recent $13.7-billion compute deal was none other than Anthropic. The company said last week that it plans to raise its stake in Northern Data from 85.2% to about 98% and launch a German-law squeeze-out to acquire the remaining shares and reach 100% ownership.
Oracle Corp. (ORCL): The American AI company was on the retail radar after Executive chair Larry Ellison unexpectedly scrapped plans to sell up to $7.5 billion of his stake in the company and said he has no other plans to sell shares.
Summit Therapeutics Inc. (SMMT): Shares of the company surged more than 4% overnight after its investigational cancer drug ivonescimab showed a 27% reduction in mortality versus Keytruda in a Phase III lung cancer trial, while the company advances FDA review and expands its cancer pipeline.
United States Oil Fund (Robinhood Tokenized Stock) (USO): Robinhood’s tokenized stock of the oil ETF garnered retail attention amid rising oil prices as the Middle East conflict escalates.
Other Market Trends
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), the SPDR Dow Jones Industrial Average ETF Trust (DIA) and Invesco QQQ Trust (QQQ) all edged lower.
The iShares 20+ Year Treasury Bond ETF (TLT) was down 0.25% amid ‘bearish’ sentiment. Spot gold prices fell to $4,332.70 an ounce.
Asian markets opened mixed on Monday. South Korea's KOSPI and Japan’s Nikkei 225 were trading in the red at the time of writing. Meanwhile, China’s SSE Composite and Australian stocks edged higher at the open.
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