NEW YORK — Global markets moved lower as oil prices surged following U.S. moves to blockade Iranian ports, lifting geopolitical risk premiums and pressuring energy supply chains worldwide.
Asia markets traded lower on the heightened tensions and rising commodity prices. U.S. stocks extended losses across major indices.
The S&P 500 fell 0.1 percent to 7,753. The Dow Jones Industrial Average dropped 0.1 percent to 53,976. The Nasdaq declined 0.3 percent to 26,605, and the Russell 2000 lost 0.6 percent to 3,017.
Surging oil prices translate directly into elevated inflation expectations, putting upward pressure on the longer end of the Treasury yield curve and increasing duration risk for fixed-income investors. Persistent energy price shocks complicate the Federal Reserve's path to 2 percent inflation. Fed Chair Kevin Warsh has maintained a firm stance on inflation control, and rising oil reinforces a higher-for-longer rate outlook—compressing room for any near-term easing in bond market pricing.
The confluence of rising inflation expectations and geopolitical instability creates conditions for yield curve flattening, where short-term rates stay elevated while long-term rates struggle to move higher. Higher energy costs combined with sustained elevated rates present a dual headwind for businesses, squeezing profit margins through increased input costs and higher borrowing expenses.
Bank of America said investor bullishness has reached its highest level since 2021—a condition associated with crowded positioning—and recommended reducing exposure to risk assets.
Argus upgraded SpaceX shares, a bright spot in an otherwise weak session.
