A surprisingly strong August jobs report raised the odds of a Fed rate hike this month, sending stocks lower and Treasury yields higher on Friday.
US benchmark crude rose to $91.48 per barrel on Friday, supported by geopolitical risk from the intensified US-Iran conflict and its potential impact on Gulf supply routes.
The six-month-long US war with Iran intensified this week, with US bombardments and Iranian retaliation raising fears of supply disruptions in the Middle East.
Oil prices rose on Friday as geopolitical tensions in the Middle East, including the US-Iran conflict, continued to threaten supply. Brent settled at $96.28 and WTI rose 0.2%.
Brent crude settled at $96.28 and WTI rose 0.2% as the US-Iran conflict intensified, raising concerns about supply disruptions in the Middle East.
The 10-year Treasury yield rose to 4.78% on Friday after the strong jobs report, as investors increased bets on a Fed rate hike that would reduce the appeal of bonds.
The strong jobs report increased the odds of a Fed rate hike this month, pushing yields higher as investors priced in tighter policy.
The yield stood at 4.78% after the report; traders will watch whether it can hold above recent lows near 4.60%.
The S&P 500 fell 0.4% as a strong jobs report raised the odds of a Fed rate hike, which typically weighs on equity valuations. However, the index still posted a modest weekly gain.
Strong jobs data increases the likelihood of a Fed rate hike, which raises borrowing costs and can pressure stock valuations.
Yes, the index managed a modest gain for the week despite Friday's decline.
The Dow Jones Industrial Average fell 0.5%, the largest decline among major indices, as rate-sensitive industrial and financial stocks struggled with higher Treasury yields.
The Dow has heavier exposure to industrials and financials, which are more sensitive to higher interest rates, while tech stocks rallied.
Two-year Treasury yields, which are highly sensitive to Fed policy expectations, rose after the jobs report as markets priced in a greater chance of a September rate hike.
The 2-year yield tracks Fed policy expectations most closely, and it rose alongside the 10-year as markets bet on a rate hike.
August nonfarm payrolls rose by 162,000, far above the 65,000 forecast, lifting expectations that the Federal Reserve will raise interest rates at its September 16 meeting. Stocks fell while Treasury yields rose as investors priced in a more hawkish Fed, with the 10-year yield climbing to 4.78%. Rate-sensitive tech shares partly cushioned the S&P 500, but the Dow and Nasdaq still closed lower.
Strong hiring raises the chances the Federal Reserve will raise interest rates this month, which can slow economic growth and hurt corporate earnings.
According to CME FedWatch, markets priced in about a 62% chance of a rate hike at the September 16 FOMC meeting after the jobs report.