Wall Street’s rally hit a wall Friday as investors dumped stocks amid a sharp jump in Treasury yields, another surge in oil prices and ongoing fears about the Iran war.
The Dow Jones Industrial Average fell over 500 points in afternoon trading, while the S&P 500 slid more than 1% and the Nasdaq Composite dropped about 1.5% as traders fled high-growth tech names that had powered the market’s record-setting run in recent weeks.
The selloff gathered steam after the 30-year Treasury yield shot above 5.1%, approaching levels not seen in nearly two decades and rattling investors already on edge over inflation and geopolitical turmoil.
Oil prices climbed after President Trump warned he was running out of patience with Iran, fueling concerns that tensions in the Middle East could worsen and further disrupt the Strait of Hormuz — one of the world’s most critical shipping lanes for crude.
West Texas Intermediate crude rose above $105 a barrel while Brent crude traded north of $108.
“There are several factors weighing on the market today, and people may be worried about holding positions over the weekend,” Derek Reisfield, co-founder and original chairman of MarketWatch, told The Post.
“One is it seems any US action on Iran may have been on hold until President Trump’s China summit was over,” he added.
“So traders have to wonder if the US starts bombing again.”
Investors had hoped Trump’s meetings with Chinese President Xi Jinping would produce some progress toward reopening the Strait of Hormuz or cooling tensions tied to the regional conflict, Reisfield said.
Instead, markets were left confronting the prospect of prolonged energy disruptions just as inflation pressures were already heating back up.
“With the Strait of Hormuz closed, there is a cut off of oil, gas and other critical economic inputs that will factor into higher prices throughout the economy,” Reisfield said.
The spike in borrowing costs added to the pressure.
The 10-year Treasury yield climbed above 4.5% while the 30-year yield surged past 5%, intensifying fears that elevated inflation could keep interest rates high and undermine richly valued stocks.
“The cost of money is going up so it is more expensive to own assets and that reduces prices,” Reisfield said.
“This is the first time 30-year yields are above 5% since 2007.”
Friday’s losses were especially severe in technology and semiconductor stocks after a blistering rally fueled by artificial intelligence enthusiasm pushed many shares to lofty valuations.
Intel fell 5%, AMD lost 3%, Micron dropped 4% and Nvidia slipped 2%. Cerebras Systems, which soared in its Nasdaq debut a day earlier, tumbled 4%.
Crypto-linked names were also hit hard as Bitcoin slipped below $80,000. Coinbase dropped 8% while Strategy slid 6%.
That added to worries sparked earlier this week by hotter-than-expected inflation readings that prompted traders to rethink the Federal Reserve’s path on interest rates.
Markets are now increasingly pricing in the possibility that the Fed’s next move could eventually be another rate hike, rather than a cut.
Microsoft stood out as one of the few major winners Friday, rising about 4% after billionaire hedge fund manager Bill Ackman disclosed that Pershing Square has built a stake in the software giant.
Still, the tone across Wall Street remained defensive as investors reassessed whether stocks sitting near record highs can withstand rising yields, expensive energy and escalating geopolitical risk all at once.
“Investors are looking at these signals and getting worried,” Reisfield said.
“The question they face is do I want to hold on at these high market price levels, or do I want to take some money off the table.
“Many of them are saying, ‘I sell some and sleep better at night.’”
Reisfield said the mood reminded him of an old Wall Street lesson about preserving gains before markets turn against you.
“There is a wonderful quote from a member of the Rothschild family who was asked how he managed to make so much money,” he said.
“And he said, ‘I always sold too soon.’”
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