The energy shock and a jump in Treasury yields stalled the S&P 500’s record run, leaving the benchmark roughly flat while the Dow and small caps slipped.
While President Donald Trump attempted to calm nerves overnight, reiterating that Tehran wants to make a deal, Iranian state media reported that Tehran had suspended all message exchanges with Washington in protest over attacks in Lebanon.
Energy markets bore the brunt of the standoff.
West Texas Intermediate crude jumped 7.5% to around $93.95 a barrel, while Brent climbed nearly 8% to roughly $97.00, as traders priced in the risk of disrupted Gulf flows even as OPEC+ signaled a modest July output increase of 188,000 barrels per day.
The oil surge rippled into rates. The yield on the 10-year Treasury note rose about 6 basis points to 4.51%, the 2-year added roughly 8 basis points to 4.09%, and the 30-year held near 5.01%. Market-implied odds of a Fed rate hike in December continue to sit above 60%.
Adding to the hawkish tone, the ISM Manufacturing PMI printed at 54.0 for May, its strongest level in four years and well above the 53.0 consensus.
The S&P 500 held steady at 7,580, while the Dow Jones Industrial Average slipped 0.3% to 50,898.62.
The Nasdaq 100 bucked the caution, adding 0.3% to 30,413.93 for a fresh record on the back of strength in AI and software. Within Magnificent Seven stocks, Nvidia Corp. (NASDAQ:NVDA) rose 4.4% to $220.32 after unveiling its new RTX Spark PC superchip.
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