Finance Evening: Stocks Slide, Oil Surges on Iran Strikes as Bond Yields Climb

📊 Today's North American Markets

U.S. stocks closed lower on the first trading day of September, while oil surged on new U.S. strikes against Iran and global bond yields climbed. Key index and commodity closes:

Source: Yahoo Finance

Stocks slide as oil surges after new U.S. strikes on Iran

Source: CNBC

U.S. stocks fell across the board on Tuesday, the first trading day of September, as inflation worries and elevated oil prices lifted bond yields at home and abroad, raising questions about whether the Federal Reserve will tighten monetary policy this month.

The Dow Jones Industrial Average dropped 419.02 points, or 0.79%, to close at 52,766.88. The S&P 500 declined 0.71% to 7,631.47, while the Nasdaq Composite pulled back 1.03% to 26,099.77.

Oil prices rose after U.S. Central Command said American forces were striking Islamic Revolutionary Guard Corps targets in Iran; Brent crude added 4.6% to close at $94.65 a barrel. Global bond yields also climbed, with the U.S. 10-year Treasury yield reaching levels not seen since January 2025, Japan's 10-year yield touching its highest since August 1996 and Germany's benchmark yield rising to a 2011 high. Baird strategist Ross Mayfield said the stock market will struggle to digest big, volatile moves in the bond market.

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Palo Alto beats estimates on AI demand, continues acquisition spree

Source: CNBC

Palo Alto Networks surpassed fiscal fourth-quarter estimates as mounting artificial intelligence risks boost demand for its cybersecurity tools. Revenue jumped 34% during the quarter from $2.54 billion a year ago, though the company posted a net loss of $282 million, or 35 cents per share, versus net income of $254 million, or 36 cents per share, a year earlier. Shares dipped about 2% in extended trading after a 5% drop during the regular session.

CEO Nikesh Arora said the acceleration of AI attacks is forcing customers to build better and faster cyber defenses, calling it a long-term tailwind that will not play out in one or two quarters. Palo Alto also announced the acquisition of AI startup Console, deepening its AI security push; Arora has accelerated dealmaking over the past year, including a $25 billion purchase of identity firm CyberArk and nearly $3.4 billion for Chronosphere.

The company issued upbeat guidance, expecting first-quarter revenue of $3.30 billion to $3.31 billion, topping the $3.22 billion estimate, and full-year revenue of $14.10 billion to $14.20 billion.

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Apple's new CEO John Ternus teases a major launch next week

Source: TechCrunch

John Ternus has officially taken the reins as Apple CEO, succeeding Tim Cook, who held the role for 15 years. The company's former senior vice president of Hardware Engineering enters the job at a critical time: on September 9, Apple will host its annual iPhone event, which is rumored to include the launch of Apple's first foldable iPhone.

On Tuesday, Ternus wrote to staff: "We have a huge launch next week that's going to be phenomenal. I'm just as excited about what lies beyond that, including the incredible products already in the works and the ones we haven't even imagined yet that we'll dream up and create together."

Tim Cook wrote on his last day as CEO: "I take enormous comfort in handing the helm to someone as brilliant and wonderful and capable as John. Few people understand what it takes to build products that change the world the way John does and I could not be more excited for his leadership."

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Fed's Barr says he'll support a rate hike if inflation doesn't ease

Source: CNBC

Federal Reserve Governor Michael Barr said Tuesday he would be prepared to support an interest rate hike if inflation doesn't ease. Speaking at a banking forum in Washington, he said he is concerned about "broader price pressures taking hold," with inflation stuck above the Fed's 2% target for nearly five and a half years.

Barr said that if trends in the data give him confidence inflation is moderating toward 2%, the Fed can take more time to assess its stance, but "if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates."

As a governor, Barr is a permanent voting member of the rate-setting Federal Open Market Committee. His remarks come amid fresh Middle East worries and rising Treasury yields, and after Fed Chairman Kevin Warsh delivered remarks last week widely read as tilting toward a hike. The latest readings showed headline prices up 3.7% over the past year, or 3.3% excluding food and energy.

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U.S. borrowing costs hit fresh highs on inflation fears

Source: BBC

U.S. borrowing costs hit a fresh high on Tuesday as renewed strikes in the Middle East pushed up oil prices and heightened concerns over inflation. The effective interest rate on borrowing over 10 years rose to 4.79%, its highest level since January 2025, as oil prices surged above $92 a barrel.

Such moves affect the rates at which the U.S. government can borrow, but also influence the rates people pay for mortgages, car loans and credit cards. Latest figures show prices rose 3.4% in the year to July, above the Fed's 2% target, while interest rates have been left unchanged for months between 3.5% and 3.75%.

Fed Governor Michael Barr said Tuesday that inflation has been too high for five years and warned the central bank should "act decisively to raise rates" if it does not cool. Meanwhile, U.S. national debt has passed the $40 trillion mark, doubling in a decade, and 30-year mortgage rates have risen to a one-year high of almost 6.7%.

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Gold under pressure as U.S. bond yields hit fresh highs

Source: Sina Finance

The U.S. 10-year Treasury yield closed at 4.756%, its highest since January 2025, after touching 4.78% intraday on September 1; the 30-year rose to 5.244%, having earlier reached 5.31%, the highest since June 2007. Global bond markets were under pressure in tandem, with Japan's 10-year yield touching 3% for the first time in 30 years.

The shift toward higher yields is being driven by three forces: a more hawkish policy outlook, with Fed Chair Warsh reaffirming price stability as the core mandate and market odds of a September hike surging from about 35% to 64%; geopolitics and oil, as the U.S.-Iran conflict escalated and Brent crude moved back above $90; and supply and term premium, with U.S. federal debt topping $40 trillion in August and heavy deficits adding to issuance pressure.

Against this backdrop, with the dollar's and yields' upward momentum weakening and central-bank gold buying providing support, precious metals are expected to recover as allocators return. Analysts see U.S. fiscal easing and deficit pressure as a genuine tailwind for precious metals, with gold potentially moving toward $4,800 after holding above $4,500.

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Euro zone inflation returns above 3%, rate hikes likely to follow

Source: CNBC

Energy price pressures drove euro zone inflation back above 3% in August, with businesses now likely facing a second blow from higher interest rates. A flash estimate from Eurostat published Tuesday showed headline inflation rose to 3.3% from 2.9% in July, the highest since September 2024, while energy inflation accelerated to 14.3% from 10.3%.

Core inflation, which strips out volatile energy, food, alcohol and tobacco components, dipped to 2.4% from 2.5%. The Iran war and blockage of the Strait of Hormuz have pushed up crude and refined product costs, with Europe especially hit by disruption in the natural gas market.

Traders have locked in expectations for the European Central Bank to hike at its September 10 meeting, with market pricing putting a 98.9% probability on a 25-basis-point increase to 2.5%. The ECB raised its key rate to 2.25% in June, its first hike since 2023.

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Japan's 10-year bond yield touches 3% for first time in nearly 30 years

Source: Xinhua Finance

Japan's 10-year government bond yield briefly reached 3% on September 1, the highest in nearly 30 years. Mutual securities firm Nippon Mutual Securities noted it was the first time the 10-year JGB yield had touched 3% since October 1996.

U.S. Treasury Secretary Bessent said on August 31 that he expects the Japanese government and the Bank of Japan to take steps to strengthen the yen, a remark that bolstered market expectations for a BOJ rate hike in September and became a key driver of rising yields.

In addition, higher crude prices stemming from the worsening Middle East situation are adding upward pressure on rates; with Japan heavily dependent on energy imports, markets anticipate domestic inflation will intensify and have been selling bonds, while concerns over Japan's deteriorating fiscal position have also added to selling pressure.

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U.S. job openings rise to 7.27 million as labor market stays sturdy

Source: AP News

U.S. employers posted slightly more job openings in July, with the Labor Department reporting Tuesday that openings ticked up to 7.27 million from a revised 7.18 million in June, keeping the labor market sturdy despite higher costs squeezing household budgets.

The Job Openings and Labor Turnover Survey also showed layoffs fell, but so did the number of people quitting their jobs, a sign of confidence in prospects. Gross hiring dipped to 5.1 million in July from 5.3 million in June.

The unemployment rate remains at a low 4.1%, with jobless claims coming in low week after week. Navy Federal Credit Union chief economist Heather Long said the labor market is back in a "low fire, low hire" mode, with companies growing cautious as the war in Iran drags on and borrowing costs have spiked. Markets now turn to Friday's August jobs report.

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California condo owners stunned by sudden $26,000 HOA fee

Source: ABC7 Los Angeles

Homeowners at the Villa Moura condominium complex in San Clemente, California, are pushing back against a more than $26,000 emergency assessment for roof replacements, saying the cost is placing a financial burden on residents and questioning whether it was legally imposed. An 81-year-old resident, Beverly Albright, said she will have to move.

Residents at the 198-unit complex said each homeowner received a $26,000 emergency assessment for new roofs, and some fear many will struggle to pay. Homeowners are fighting the assessment by seeking to recall HOA board members and by filing a claim alleging the board violated the law.

HOA expert and attorney Michael Kushner said large special assessments have become more common and that California homeowners generally must pay assessments even while challenging them, as state law does not recognize the right of offsets. Residents said they were warned liens could be placed on their properties if they don't pay, and they have launched a GoFundMe page to help those who can't afford the cost.

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