US Stock Market Falls Amid Fears of Interest Rate Hike
After Iran-US tensions escalated, Iran's proposal to reopen the Strait of Hormuz was rejected, pushing oil prices and government bond yields higher. The US stock market came under pressure, while investors focus on this week's PCE and employment data.
As tensions between Iran and the US further escalated, the US stock market came under pressure on Monday. After US President Donald Trump rejected Iran's seven-day proposal to reopen the Strait of Hormuz, concerns grew among investors that global oil supply could be affected.
Due to the tensions, crude oil prices rose, and US government bond yields also climbed significantly. The yield on the 10-year US Treasury note rose by seven basis points to 5.25 percent. This is the highest level in 2026 and is said to have reached the highest level since mid-2007.
Similarly, the yield on the 30-year Treasury note reached around 5.6 percent. The yield on the two-year note also rose by more than five basis points to 4.916 percent.
Sharp Volatility in Oil Prices
After no agreement was reached on reopening the Strait of Hormuz, crude oil prices surged in early trading on Monday. Although they fell somewhat later, prices remained at high levels.
West Texas Intermediate (WTI) crude traded at around 92.6 US dollars per barrel. Similarly, the price of Brent crude produced from the North Sea rose by 0.92 percent to above 105 US dollars.
The rise in oil prices has also increased concerns that inflationary pressure in the US could further intensify. Investors appear cautious, saying that this could put pressure on the US central bank to further tighten its interest rate policy.
According to market estimates, there is about a 70 percent chance that the US central bank will raise interest rates by another 0.25 percentage point at its meeting on October 28.
Volatility in Large Company Shares
Along with Iran-US tensions, large company shares in the US stock market also showed mixed effects on Monday.
- Nvidia's share price rose by 1.68 percent. Investors' sentiment turned positive after the company's board approved an additional 150 billion US dollars share buyback program. With this, the company's remaining share repurchase authorization reached 235 billion US dollars.
- However, Boeing's share price fell by about 7 percent. Investor concerns grew after the company disclosed a software issue that could affect the landing process of the 737 Max aircraft.
- Meta Platforms' shares also fell by about 4.8 percent. After the company announced the appointment of MongoDB's CEO to lead its new artificial intelligence initiative, MongoDB's shares also saw a sharp decline.
- Tesla's share price fell by about 4 percent after the program to unveil the new version of the Roadster was postponed.
- SpaceX's share price also fell by more than 2 percent. However, the company's Starship rocket successfully reached orbit for the first time during its 14th test flight.
Investors' Eyes on Economic Data
Now investors' attention is focused on US economic data to be released this week. On Wednesday, the Personal Consumption Expenditures (PCE) price index for August will be released. PCE is viewed as an important indicator for assessing the state of US inflation.
Then on Friday, the September employment report will be released.
Investors are watching these data with special interest, as changes in inflation, employment, and oil prices could influence the US central bank's upcoming monetary policy and interest rate decisions.