SPX: S&P 500 Futures Waver With Oil Above $108 and Yields Near 5%

Wall Street faces another inflation test after surging energy prices pushed Treasury yields higher and revived expectations of a Fed rate increase.

📉 Stocks lose their footing

• S&P 500 futures were little changed Friday after the index fell 0.6% to 7,591.75 in the previous session.
• That extended its losing streak to four days — the sharpest four-session decline since June — and left the benchmark nearly 3% below its August peak.
• Asia provided little encouragement. Japan’s Nikkei 225 dropped 3%, while South Korea’s Kospi slid roughly 2.7% as investors reduced exposure to technology exporters, manufacturers and other businesses vulnerable to rising energy costs and bond yields.
• European shares also opened lower after the European Central Bank raised interest rates to 2.5% and warned that the Middle East conflict was adding to inflation.
• The mild selloff has spread from being a Wall Street wobble to a synchronized repricing of growth, inflation and borrowing costs.

🛢️ Oil stirs the market landscape

• Brent crude climbed toward $109 a barrel, while US oil traded above $103. Both benchmarks are up roughly 13% this week as escalating Middle East tensions threaten important shipping routes and fuel concerns about a prolonged disruption to global energy supplies.
• Higher oil prices affect far more than energy companies. They raise transportation, manufacturing and household costs, potentially keeping inflation elevated even if other price pressures cool.
• The energy shock has already reached consumers, with US diesel prices rising above $6 a gallon. Oil producers may benefit from higher prices, but airlines, retailers, manufacturers and other fuel-intensive businesses face a less flattering calculation.

📊 CPI gets the final word

• The 10-year Treasury yield rose toward 5%, its highest level in nearly three years, while the 30-year yield reached a 19-year high. Rising yields increase financing costs and reduce the relative appeal of stocks.
• Markets now assign roughly a 70% probability to a Federal Reserve rate increase next week, up from 64% before the latest inflation data. August producer prices rose 0.4% in another sign of economic strain.
• Friday’s consumer-price report now carries even more weight. A hot reading could push yields through 5% and deepen the S&P 500’s retreat.
• Elsewhere, gold edged toward $4,325 but remained on course for a third consecutive weekly decline. Bitcoin slipped toward $78,000, offering another sign that traders are reducing risk rather than seeking alternatives to conventional markets.