Oil Up, Yields Over 5%: Why September Hurt Stocks and Borrowers
Brent crude rose 3.9% to $103.08 a barrel on September 23, while West Texas Intermediate settled up 1.8% at $92.16. The Wall Street Journal reported the move as traders weighed U.S.-Iran talks and pipeline developments. Energy rose while bonds and stocks fell, a pattern that ran through September.
The early-September move was sharp. Renewed hostilities between the U.S. and Iran lifted oil prices and long-term yields, according to The Wall Street Journal reporting on August 31. Reuters reported September 1 that the Dow fell 0.79%, the S&P 500 fell 0.71% and the Nasdaq fell 1.03%. Stocks fell as the 10-year Treasury yield, the annual interest the government pays to borrow for 10 years, jumped back over 5% to its highest since 2007. The benchmark yield jumped above 5.1% in the conflict, The Wall Street Journal reported September 1. For savers that means better interest on cash. For borrowers it means higher mortgages and business loans.
Pressure carried into September 23-24. Reuters reported September 23 that Wall Street ended lower, pulled down by Alphabet and Amazon as Treasury yields climbed. Yields on 2-year Treasuries touched their highest since 2024 that day. Technology led S&P 500 declines, with Nvidia, Broadcom and Microsoft each down over 1%, September 24 market reporting showed. Agence France-Presse reported September 24 that stocks fell as oil rose and bonds came under pressure, with the 10-year at its highest since 2007.
The Associated Press put the 10-year at 5.15% on Thursday, up from 5.11% late Wednesday. That left the long end above the 5% line retaken in early September.
The selloff broadened. Declining issues beat advancers by 2.56 to 1 on the NYSE on September 15, with 113 new highs and 673 new lows. On September 18, Nasdaq breadth was 1,973 stocks higher and 2,810 lower, a 1.42-to-1 ratio of decliners to advancers.
That was a break from strength. The S&P 500 had posted 11 weekly gains in the prior 12, led largely by technology, before a 1.4% Big Tech-led drop. On September 22, Reuters reported the Nasdaq still added 0.45% to 27,244.28 for a second straight record close while the Dow fell 0.36% to 51,863.69. Background reporting tied the conflict-driven jump in oil and gas prices to inflation fears, or rising living costs, and reduced expectations for rate cuts.
The broader context here is a supply shock hitting both inflation and borrowing costs. Higher crude lifts headline inflation and makes future inflation less certain. That tends to widen breakevens, the market's inflation guess, and term premium, the extra pay investors want to lock money up for years. For long-duration stocks, companies valued on distant profits, higher yields cut present value faster than near-term earnings can help. Megacap growth has the most of that duration risk, so narrow leadership hurts when yields jump.
In my view, the structure to watch is energy and duration moving against stocks together. When oil and yields rise at once, the usual offset fails. Shorter-term cash flows hold up better, but energy is too small a weight in broad indexes to cover losses from tech repricing. A 2-year high plus a 10-year over 5% points to markets removing expected cuts rather than pricing new hikes, a steady but firm policy stance working through inflation-adjusted yields. That leaves equities tied to weekly oil data and to how long policy stays tight.
