U.S. stock indexes remain near 2-week lows in the final hours of the August 18 session (S&P500: -0.54%), while fading hopes of a peace deal between the U.S. and Iran supported a rise in oil prices amid elevated government bond yields.
The combination of higher energy prices and the cost of long-term borrowing is viewed negatively by the equity market. The yield on 10-year bonds edged down slightly today, pointing to some risk aversion in the stock market. Meanwhile, LSEG data showed that traders are pricing in a 96% probability of a 25 bp rate hike this year. However, the probability of a hike as soon as September fell after last week’s inflation data.
Sell-offs in semiconductor stocks are also weighing on the broader market. Among notable mega-cap underperformers is Meta Platforms. Today marks the opening court hearings in a case brought by the attorneys general of 29 states, which alleges that Facebook and Instagram were designed to “encourage compulsive use among young users.”
Gold prices fell amid a stronger U.S. dollar ahead of tomorrow’s release of the minutes from the Fed’s July policy committee meeting. Comex gold futures closed at $4366 per ounce (-1.17%).