Oil prices leap to their highest since May and drag Wall Street lower
[September 11, 2026] By
STAN CHOE
NEW YORK (AP) — Oil prices keep climbing as the war with Iran keeps
clogging the global flow of crude, and they leaped Thursday to their
highest levels since before the summer. That worsened worries about
inflation and cranked up pressure within the bond market, helping to
send stocks lower again on Wall Street.
The S&P 500 fell 0.6% for a fourth straight loss, its longest such
streak since June, though it’s not far from its all-time high set last
month. The Dow Jones Industrial Average dropped 316 points, or 0.6%, and
the Nasdaq composite sank 0.7%.
Stocks sank under the weight of rising oil prices. Brent crude, the
international standard, climbed another 6.3% and briefly topped $108 per
barrel for the first time since May before settling at $107.63.
It’s jumped from less than $72 in early July as hopes fade that the war
with Iran will allow oil to flow freely again from the Middle East
anytime soon. President Donald Trump said on Wednesday that oil prices
likely won’t come down until after the U.S. midterm elections in
November.
The jump has vaulted the price for a gallon of regular gasoline to an
average of nearly $4.28 across the United States, according to AAA.
That’s up nearly 34% from a year earlier and is not only costing people
more at the pump but also through higher prices for all kinds of
products that move by truck to store shelves.
A report on Thursday said inflation at the U.S. wholesale level
accelerated to 5.4% last month from 4.8% in July, and retailers could
eventually pass such increases in prices onto shoppers. A report is
coming on Friday that will show how much inflation U.S. consumers are
feeling.
The typical move to rein in high inflation is for the Federal Reserve to
raise its main interest rate, the federal funds rate. Such a move then
filters out through the rest of the bond market, makes it more expensive
for U.S. households and businesses to borrow money, slows the overall
economy and undercuts prices for investments. That hopefully would
remove some of inflation’s fuel.
A report on Thursday suggested the U.S. job market may remain solid,
with fewer workers applying for unemployment benefits last week. That
could give the Fed more confidence that the economy could withstand
higher interest rates.
Following Thursday’s reports, traders see a roughly 73% chance the Fed
will raise the federal funds rate at its meeting next week. That’s up
from the 61% probability seen the day before, according to data from CME
Group. That’s also despite Trump’s consistent lobbying for interest
rates to go lower rather than higher.
The Fed’s counterpart in Europe, the European Central Bank, raised its
own interest rates on Thursday in hopes of getting inflation in check.
It cited “the conflict in the Middle East” and how it “continues to
generate inflation pressures.”
It all pushed the yield on the 10-year Treasury up to 4.95% from 4.83%
late Wednesday, which is a significant move for the bond market.
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 It’s up from just 3.97% before the
war with Iran began and is back to where it was in the autumn of
2023. That was after the Fed cranked the federal funds rate higher
to get super-high inflation coming out of the COVID pandemic under
better control.
Higher yields mean investors can make more money putting their money
into bonds, which can in turn make investors less willing to pay
high prices for stocks and other investments that are riskier than
bonds.
Some investors see a 5% yield on the 10-year Treasury as the next
potential flashpoint. But strategists at Bank of America’s Research
Investment Committee suggest 7% may be the more important threshold,
pointing to peaks for expensive stocks around that point in the
past.
In the meantime, the rising 10-year Treasury yield is making
mortgages more expensive and hurting the housing industry. One
report on Thursday said the average long-term U.S. mortgage rate hit
its highest level in over 14 months, while a second one said sales
of previously occupied U.S. homes fell in August to their slowest
pace in more than a year.
That helped sent stocks of homebuilders lower, including drops of
3.5% for Lennar and 2.4% for D.R. Horton.
Elsewhere on Wall Street, Macy’s fell 4.7% even though the retailer
reported stronger profit and revenue for the latest quarter than
analysts expected. While raising its forecast for earnings this
fiscal year, it warned that “there are macroeconomic and
geopolitical factors that could influence” how much its customers
feel comfortable spending.
Macy’s said it received $116 million in tariff refunds from the
government — $98 million during the quarter and another $18 million
after the quarter ended. Macy’s CEO Tony Spring told The Associated
Press Thursday that it’s using some of the proceeds to lower prices
on certain items like furniture and other big-ticket purchases.
All told, the S&P 500 fell 44.66 points to 7,591.70. The Dow Jones
Industrial Average dropped 316.56 to 52,064.10, and the Nasdaq
composite sank 171.62 to 26,081.72.
In stock markets abroad, indexes slipped across much of Europe and
Asia. Hong Kong’s Hang Seng dropped 1.3% for one of the world’s
biggest moves.
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AP Business Writers Anne D’Innocenzio and Elaine Kurtenbach
contributed to this report.
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