The peace rally that had cooled oil prices and pushed stocks to fresh records looks like it’s finally sputtering.
Oil prices saw a big spike on Monday on news that Iran’s negotiators have stopped working with the US, with the nation planning to again block all traffic through the Strait of Hormuz in response to Israel’s attacks against the Iranian-backed Hezbollah group in Lebanon.
Brent crude, the international benchmark, jumped nearly 7% Monday morning to trade around $97 a barrel. West Texas Intermediate crude also surged 8% to $94 a barrel.
Bond yields rose and stocks dropped on the news. The 10-year US Treasury yield jumped five basis points to 4.5%, and the 30-year bond yield rose two basis point to 5.02%.
Here’s where US indexes stood around 11:00 a.m ET on Monday:
The news, which was reported by Iran’s state media, dispelled any lingering optimism that the US and Iran are close to a peace deal. The ceasefire between the two has frayed amid tit-for-tat exchanges by both sides, as well as the US’ ongoing blockade of Iranian vessels and operations in the Strait of Hormuz.
Over the weekend, the US said it bombed Iranian radar and drone command and control sites after Iran shot down an American MQ-1 Predator drone. On Monday, Iran fired two ballistic missiles at US bases in Kuwait that were stopped by air defenses. And Israel has expanded its operations against Hezbollah in Lebanon in recent days, including strikes in Beirut.
Iranian foreign minister Seyed Abbas Araghchi accused the US and Israel of violating the ceasefire on X, writing, “The United States and Israel bear responsibility for the consequences of any breach of the truce.”
Prior to Monday’s fresh spike, oil prices had cratered by 20% from their wartime peaks, falling sharply last week as US President Donald Trump teased his sign-off on a deal to extend the ceasefire while talks continued. In recent days, Trump has also introduced tougher terms for an agreement between Washington and Tehran.
In a post on Truth Social Sunday evening, Trump again indicated a “good” deal was coming, lashing out at criticisms of how the war has been handled.
“It is MUCH tougher for me to properly do my job and negotiate, when political hacks keep negatively ‘chirping,’ at levels never seen before, over and over again, that I should move faster, or move slower, or go to war, or not go to war, or whatever. Just sit back and relax, it will all work out well in the end – It always does!” Trump wrote.
The White House did not immediately respond to a request for comment sent by Business Insider.
The mpove up in bond yields is a sign that investors are thinking again about inflation as oil resumes its upward march. Last week’s inflation update was in line with expectations, but broadly showed inflation is still moving higher and will be an issue for the Federal Reserve as it gets ready for its policy meeting later this month.
The stock market was buoyed somewhat by the strong gain in Nvidia shares, which rallied on news that the tech titan is getting into the PC chip game.
Shares advanced 4% on the news, while PC hardware rivals AMD and Intel slumped. The sector still remains on its historic rally, with the iShares Semiconductor ETF up almost 90% year to date.
Other notable moves in the sector:
