U.S. stocks extended their losing streak on Thursday as another surge in oil prices and Treasury yields intensified concerns about inflation and interest rates. The Dow Jones Industrial Average fell about 0.6%, while the S&P 500 and Nasdaq Composite each dropped roughly 0.6%, putting all three major indexes on track for a fourth consecutive session of losses.
Brent crude climbed above $105 per barrel as renewed U.S.-Iran fighting fueled fears of prolonged disruptions through the Strait of Hormuz. The energy shock helped push the 10-year Treasury yield to 4.91%, its highest level since 2023, while traders raised the probability of a Federal Reserve rate hike next week to nearly 70%.
Market Movers:
- AeroVironment (AVAV) +11%: Shares jumped after the defense contractor reported record fiscal first-quarter revenue of $480.5 million, up 6% from a year ago, while adjusted EPS of $0.59 more than doubled expectations. Autonomous Systems revenue climbed 21%, led by a 71% surge in uncrewed aircraft systems sales, although the company maintained full-year guidance with midpoints below consensus.
- The Cooper Companies (COO) -14%: Shares tumbled after Cooper decided to retain CooperSurgical following a strategic review and cut its full-year revenue and earnings outlook. Fiscal third-quarter revenue also missed expectations, overshadowing an EPS beat and an increase in the company’s share repurchase authorization to $3 billion.
- American Eagle Outfitters (AEO) -14%: Shares plunged despite second-quarter sales rising 9.4% and profit climbing 34%, as investors looked past a nearly $200 million tariff refund that boosted the results. Comparable sales at the American Eagle brand fell 1%, while gross margin excluding the tariff benefit was pressured by promotions and higher supply-chain costs.
- Intel (INTC) -5%: Shares fell after Piper Sandler initiated coverage with a Neutral rating and a $110 price target, arguing that much of Intel’s turnaround progress is already reflected in its valuation. The firm acknowledged improvements in Intel’s manufacturing roadmap and foundry momentum but pointed to execution risks and continued data-center competition.
Oil Shock Keeps Building
Oil remained the biggest threat to markets Thursday as Brent crude pushed beyond $105 per barrel following renewed military action between the U.S. and Iran. Concerns about disruptions through the Strait of Hormuz have intensified as the conflict continues to threaten one of the world’s most important energy transit routes. The latest surge is raising fears that an energy shock could spill into broader inflation. President Trump said Wednesday that oil prices may remain elevated until after the midterm elections, while markets increasingly see persistent energy inflation as another reason the Fed could tighten monetary policy.
Treasury Yields Jump as Fed Bets Turn Hawkish
Bond yields climbed alongside oil, with the 10-year Treasury reaching 4.91% and the 30-year yield rising to 5.35%. The more policy-sensitive two-year yield jumped as much as 10 basis points to 4.53%. Markets are responding by rapidly increasing expectations for a Fed move. CME FedWatch showed the probability of a quarter-point rate hike approaching 69% Thursday, up from roughly 60% earlier in the week.
Inflation Data Takes Center Stage
Thursday’s Producer Price Index offered few signs of immediate relief. Wholesale prices rose 5.4% from a year earlier, while core PPI increased 4.6%, with both readings largely matching expectations. That puts even more attention on Friday’s Consumer Price Index. With oil above $105, Treasury yields at multiyear highs and August payrolls showing surprising strength, a hotter CPI reading could strengthen the case for another rate hike and extend the pressure on equities.
Oracle earnings after Thursday’s closing bell will provide another major test, particularly for technology stocks. Investors will be watching its results for clues about whether enormous AI infrastructure spending continues to translate into accelerating cloud demand.
Looking Ahead
Friday’s CPI report now represents the market’s biggest near-term catalyst. Softer inflation could cool Treasury yields and rate-hike expectations, but another strong reading could make a September increase increasingly difficult for the Fed to avoid. Oil remains the wildcard. As long as crude stays above $100 and disruptions in the Middle East threaten global supplies, investors may struggle to look past the risk that an energy-driven inflation resurgence keeps interest rates higher for longer.