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Markets Slide Into Correction as Oil Jumps and Yields Climb on Middle East War

Rising energy prices from the Middle East conflict are shifting rate expectations toward higher for longer.

Overview

  • The Dow, Nasdaq and Russell 2000 fell into correction territory after another losing week for U.S. stocks, with a late-day slide following reports of potential U.S. troop deployments.
  • Brent crude closed at $112.19 and WTI approached $100 as the war hit energy assets from Iraqi fields under force majeure to reported damage at Israel’s Haifa refinery and Qatar’s giant LNG facility.
  • The 10-year Treasury yield climbed to about 4.38%–4.39% and the VIX jumped, reflecting a repricing toward higher-for-longer rates.
  • Gold dropped about 2% on Friday and more than 10% for the week, its worst weekly performance since 1983.
  • Risk-off extended to emerging markets, with Mexico’s IPC down 1.63% and the peso weaker, while mega-cap tech led U.S. declines and energy outperformed.