(Bloomberg) — Turmoil in the Middle East sparked fresh losses across stocks and bonds on concern about the spillover effects of elevated energy costs to inflation and economic growth, with hostilities showing no signs of a letup.
The S&P 500 fell about 1%, set for its the longest streak of weekly declines in a year. The drop accelerated as the Wall Street Journal reported the Pentagon is sending three warships and thousands of additional Marines to the Middle East. Short-dated Treasuries slumped, with traders now pricing in a 50% chance of a Federal Reserve hike by October. UK government borrowing costs hit the highest since the global financial crisis.
While the rally in Brent eased on Friday, oil was still up about 50% since the start of the war in Iran. The dollar rose, trimming its loss for the week. Gold headed for its worst weekly retreat since the onset of the pandemic.
Markets have been rocked by disruption to supply out of the Persian Gulf, with shipping through the Strait of Hormuz — a chokepoint for about a fifth of global oil and liquefied natural gas flows — near standstill. Iran pressed ahead with attacks on Gulf Arab states even after Israel signaled it would stop targeting the Islamic Republic’s energy infrastructure.
The US is considering an operation to take over Kharg Island, Iran’s major oil-export site, to pressure the Islamic Republic to reopen the Strait, Axios reported, adding that a decision hasn’t been made.
“Some investors can be hesitant to maintain their positions heading into the weekend when more negative headlines from the Middle East can emerge,” said David Laut at Kerux Financial.
Fed Governor Christopher Waller said he’s cautious about how elevated oil prices will impact inflation, though a weak jobs market may still warrant rate cuts this year. Fed Vice Chair for Supervision Michelle Bowman told Fox Business she supports three reductions in 2026 and expects strong growth, but is keeping an eye on any war impacts.
Friday’s “triple witching” might add to the market instability. Roughly $5.7 trillion in notional options tied to individual US stocks, indexes and exchange-traded funds were set to expire, according to Citigroup Inc.
Corporate Highlights:
FedEx Corp. raised its full-year profit forecast, signaling the plan to restructure its delivery network is gaining traction despite economic volatility. The US charged a Super Micro Computer Inc. co-founder with illegally diverting billions of dollars in Nvidia Corp.-powered servers to China, initiating its highest-profile case against alleged smuggling of restricted AI technology to the Asian country. Nvidia Corp.’s $20 billion licensing deal with Groq is being probed by a pair of Democratic senators over whether it violates antitrust laws by improperly avoiding a merger review and illegally consolidating its power in the market for AI computing. Meta Platforms Inc., Alphabet Inc. and Microsoft Corp. joining an index of high-grade firms’ credit default swaps is another sign of investors increasingly hedging hyperscalers’ debt amid surging bond sales. Goldman Sachs Group Inc. Chief Executive Officer David Solomon is betting a comeback in deals, and growth across its wealth management and alternatives business, will help the firm exceed its return targets. Ecolab Inc. has agreed to buy CoolIT Systems Inc., a company that develops cooling technology for AI data centers, in a $4.75 billion all-cash deal. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.7% as of 10:05 a.m. New York time The Nasdaq 100 fell 1% The Dow Jones Industrial Average fell 0.3% The Stoxx Europe 600 fell 0.5% The MSCI World Index fell 0.6% Currencies
The Bloomberg Dollar Spot Index rose 0.4% The euro fell 0.4% to $1.1544 The British pound fell 0.6% to $1.3350 The Japanese yen fell 0.8% to 159.03 per dollar Cryptocurrencies
Bitcoin fell 0.7% to $69,991.66 Ether fell 0.7% to $2,132.6 Bonds
The yield on 10-year Treasuries advanced 10 basis points to 4.35% Germany’s 10-year yield advanced four basis points to 3.00% Britain’s 10-year yield advanced 14 basis points to 4.99% The yield on 2-year Treasuries advanced 12 basis points to 3.91% The yield on 30-year Treasuries advanced eight basis points to 4.91% Commodities
West Texas Intermediate crude fell 0.3% to $95.29 a barrel Spot gold fell 0.6% to $4,621.97 an ounce ©2026 Bloomberg L.P.