U.S. stocks fell on Wednesday as oil surged above $100 a barrel and Treasury yields jumped, renewing concerns about inflation and higher interest rates. The Dow Jones Industrial Average dropped about 0.6%, while the S&P 500 fell 0.4% and the Nasdaq Composite lost roughly 0.6% as investors extended Tuesday’s risk-off move.
Wall Street faced pressure from multiple directions as escalating U.S.-Iran tensions threatened energy supplies through the Strait of Hormuz and the 10-year Treasury yield climbed to 4.84%, its highest level since October 2023. Traders also continued to price in roughly a 60% chance of a quarter-point Fed rate hike this month as markets await fresh inflation data.
Market Movers:
- Signet Jewelers (SIG) +19%: Shares surged after Signet delivered strong fiscal second-quarter results, including 1.9% comparable-sales growth in North America and an 80-basis-point expansion in gross margin. The jeweler also raised its full-year earnings and operating-income outlook while announcing a $125 million accelerated share repurchase.
- Meta Platforms (META) +6%: Shares jumped after Meta unveiled Muse, an autonomous AI agent capable of completing multi-step web and mobile tasks, alongside new paid AI subscription tiers. Wall Street responded enthusiastically to the launch, with analysts pointing to the potential for a significant new AI product cycle at the company.
- Lithium Americas (LAC) +6%: Shares climbed after JPMorgan resumed coverage with an Overweight rating, citing an improving long-term lithium outlook and increased confidence in the Thacker Pass project. The firm set a $6 price target, implying roughly 100% upside from the stock’s previous close.
- Chime Financial (CHYM) +6%: Shares gained after Chime agreed to acquire longtime banking partner Stride Bank for $590 million in cash, with the company expecting more than $100 million in net synergies. Chime also raised its third-quarter and full-year revenue and adjusted EBITDA guidance, adding to investor enthusiasm around the deal.
- Mission Produce (AVO) +4%: Shares advanced after fiscal third-quarter sales jumped 26% as avocado volumes increased 38%, helping adjusted earnings beat expectations. Mission also raised its estimated annualized synergies from the Calavo acquisition to $30 million while maintaining its fourth-quarter adjusted EBITDA outlook.
- ServiceTitan (TTAN) -24%: Shares plunged despite better-than-expected quarterly earnings and 21% revenue growth as investors focused on a slightly soft third-quarter sales forecast. Full-year revenue guidance remained broadly in line with expectations, offering little upside for a stock facing a high bar from investors.
- Casey’s General Stores (CASY) -17%: Shares tumbled despite beating expectations for revenue, EBITDA and earnings as investors took profits following a rally of more than 40% this year. Analysts largely remained positive on the company’s sales trends and fuel margins, suggesting elevated valuation and expectations played a major role in the selloff.
- Chewy (CHWY) -6%: Shares fell after mixed quarterly results showed improving sales and margins but softer growth in spending per active customer and weaker free cash flow. Chewy raised its full-year sales outlook, but the stronger guidance failed to overcome concerns surrounding customer spending and liquidity.
Oil Tops $100 as Middle East Conflict Escalates
Brent crude climbed to around $101 per barrel Wednesday, while WTI reached roughly $96, after fighting between the U.S. and Iran intensified and the U.S. struck five Iranian oil tankers. Persistent disruptions around the Strait of Hormuz have raised concerns that the energy shock could last longer than markets initially anticipated.
The surge is especially troublesome for the Fed because higher energy costs threaten to keep inflation elevated just as the labor market shows renewed strength. Friday’s CPI report could now carry even more weight in determining whether policymakers raise rates this month.
Treasury Yields Jump to Multiyear Highs
Bond markets added another layer of pressure after Treasury Secretary Scott Bessent announced plans to triple the size of the government’s next buyback of 10- to 20-year securities to $6 billion. The market initially welcomed the announcement before reversing sharply. The 10-year Treasury yield climbed to 4.84%, while the 30-year reached 5.3%, increasing pressure on equity valuations — particularly in growth and technology stocks.
AI Spending Remains a Bright Spot
Despite the broader market weakness, AI investment continues to generate significant activity. U.S. convertible bond issuance has already reached a record $135 billion this year, with nearly half tied to the AI industry as companies seek additional capital to finance infrastructure expansion. Meta’s rally provided another reminder that investors remain willing to reward companies that can demonstrate new ways to monetize their enormous AI investments. That optimism, however, is increasingly competing with the pressure created by higher yields and tightening financial conditions.
Looking Ahead
Inflation remains the next major test for Wall Street, with Friday’s CPI report potentially determining the direction of both Treasury yields and Fed expectations. A hotter reading could strengthen the case for a September rate hike, while softer inflation could provide some relief after this week’s bond-market selloff. Oil may be the bigger wildcard. With Brent already above $100, further disruptions in the Middle East could intensify inflation fears and keep pressure on stocks even if underlying economic data begins to cool.