Iran War: Stocks sink to begin the week as oil costs rise

Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, discusses elevated geopolitical uncertainty and its impact on the markets.

Wall Street’s worries about an inflation resurgence sent bonds slumping as oil surged amid an escalating war in the Middle East, with traders trimming bets on rate cuts. The dollar and gold climbed. Stocks pared losses.
Also weighing on Treasuries were figures showing manufacturing expanded, with input prices soaring at the fastest pace since 2022. Ten-year yields headed toward their biggest advance since October. The S&P 500 pared most of a slide that earlier topped 1% as energy and defense firms rallied while the software group bounced. Airlines tumbled.
As tanker traffic all but halted through the Strait of Hormuz and a big refinery in Saudi Arabia stopped, West Texas Intermediate crude soared 6.5%. Diesel futures jumped more than fifth at one point. In Europe, liquefied natural gas surged after Qatar halted output.
Uncertainty about oil prices may play a big role in determining broader market sentiment, according to Chris Larkin at E*Trade from Morgan Stanley. 
“There are more questions than answers right now, but a stabilizing energy picture could have a positive ripple effect, while concerns about a longer-term disruption could have the opposite,” he said.
US-Israeli strikes on Iran quickly escalated into a broader conflict, extending a flight away from riskier assets. President Donald Trump said the attacks could last for weeks and called on the nation’s leaders to capitulate, while the Islamic Republic’s security chief ruled out negotiations.
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