US stocks drop as oil, Treasury yields rise

The Dow Jones Industrial Average dropped 347.11 points, or 0.67%, to 51,481.51, the S&P 500 shed 59.72 points, or 0.77%, to 7,683.69 and the Nasdaq ​Composite slipped 248.34 points, or 0.92%, to 26,820.38

US stocks fell on Monday as oil prices and Treasury yields increased, with investors weighing uncertainty over the prospects ​for an Iran war peace deal and the impact on the central bank’s rate path.

The Dow Jones Industrial Average dropped 347.11 points, or 0.67%, to 51,481.51, the S&P 500 shed 59.72 points, or 0.77%, to 7,683.69 and the Nasdaq ​Composite slipped 248.34 points, or 0.92%, to 26,820.38.

The decline for the S&P was its largest daily percentage drop since August 20.

Crude prices had climbed after US president rejected a peace deal from Iran but pared gains on expectations that Qatari mediators would hold talks with the two countries to find a possible deal.

After pulling back from highs at the start of the month, oil prices have accelerated higher in recent days as hopes that a peace deal may be on the horizon have diminished.

The rising prices of crude and diesel fuel have fanned inflation worries and pushed US Treasury ​yields higher, along with comments from central bank officials indicating that more rate hikes might be needed if price pressures fail to moderate after the central ​bank raised interest rates by 25 basis points earlier this month.

Iran is driving oil prices, and oil prices are driving inflation, and ⁠inflation is driving interest rates, said Jack Ablin, chief investment strategist and founding partner at Cresset Capital Management in Chicago. We’re getting to a point now where interest rates ​are looking pretty attractive relative to equities, which is really the first time in close to 20 years, so that’s something that we’re certainly paying attention to.

It’s less of an ​earnings story right now than it is a valuation story, he said. When you get an asset class that has been fighting with one arm tied behind its back for 20 years, now all of a sudden it’s looking pretty competitive.