The S&P 500 Index closed down 0.58% and the Dow Jones Industrial Average fell 0.60% on Thursday, with both indexes hitting 5-week lows. The Nasdaq 100 Index declined 1.08%. Amid rising energy prices, WTI crude oil surged over 6% to a 3.5-month high, driven by concerns over ongoing US-Iran tensions which are likely to elevate inflation risks and interest rates.
Key economic indicators showed the US August Producer Price Index (PPI) rose 5.4% year-over-year, exceeding expectations of 5.3%. Weekly initial unemployment claims fell by 1,000 to 206,000, indicating a stable labor market. However, existing home sales fell 2.0% month-over-month to 3.98 million, a 14-month low.
In response to escalating trade tensions, particularly between the US and Canada, markets are pricing in a 75% chance of a 25 basis point rate hike during the upcoming FOMC meeting on September 15-16. Notably, European bond yields have also soared, with the UK Gilt yield reaching 5.38%, the highest in 19 years.
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