Brent tops $100 after U.S. tanker strikes as stocks fall for a third day
Wednesday, September 9: The S&P 500 fell 0.5% and Brent crude rose above $100 after U.S. strikes on Iranian tankers; Meta and semiconductors limited the cap-weighted decline.
The U.S. military said it destroyed five Iranian crude tankers after Iran's Revolutionary Guard fired ballistic missiles at a Navy warship. Brent crude was at $101.70 a barrel late Wednesday, up 3.9%; West Texas Intermediate rose 4.0% to $96.78. The S&P 500 fund SPY fell 0.5%, its third straight decline, and that still flattered the session.
Most of the U.S.-listed ETF universe went down together, on some of the lightest S&P 500 and Nasdaq-100 fund volume in 20 sessions. Across that board, 3,839 closed lower and 731 closed higher. That is not a violent rotation. The spread between the best and worst sector funds was 2.3%, a 19th-percentile session for dispersion. Energy was the only S&P sector fund that rose. Technology finished unchanged. The other nine fell.
Energy led; industrials lagged by 2.3 points
- +0.8%
- +0.03%
- −0.3%
- −0.4%
- −0.6%
- −1.1%
- −1.1%
- −1.2%
- −1.2%
- −1.3%
- −1.5%
Cap-weighted U.S. equity funds declined less than equal-weight and small-cap funds; oil and gold funds rose, while long Treasurys fell.
The Cboe Volatility Index rose 4.7% to 16.46, a modest print for a third down day and a $100 barrel. Duration still found buyers. Energy stocks did not chase crude. The better reading of that combination, and of the narrow sector spread, is that the market treated the strikes as bounded.
Meta and semiconductors limited the cap-weighted drop
Meta Platforms rose 6.6% to $653.69 after launching Muse, a personal artificial-intelligence agent. In SPY, that 2.0% position added 0.13 percentage points, the largest single contribution among the fund's 504 holdings. Micron added 0.05 percentage points and Advanced Micro Devices 0.04.
The Nasdaq-100 fund QQQ fell 0.3%. Meta added 0.19 percentage points there. Micron added 0.14 and AMD 0.11; together the two chip names added more than Meta. The equal-weight Nasdaq-100 fund QQQE fell 0.8%.
Apple held its first product event under Chief Executive John Ternus and unveiled the iPhone Duo, a foldable phone starting at $1,999. Apple shares fell 0.3%. The hardware launch of the day left almost no mark on the indexes. The software launch did.
The offsets sat in the same neighborhood. Nvidia, an 8.3% weight in SPY, fell 0.9%. Amazon dropped 1.8%. Alphabet's two share classes fell 2.3% and 2.1%. Together those four lines subtracted more than Meta added. The Dow industrials fund DIA fell 0.7%, also its third straight loss, with Goldman Sachs, UnitedHealth, Alphabet, and Caterpillar the largest drags on a price-weighted index.
Industrials were the weakest sector. The industrials fund XLI fell 1.5%, with Vertiv Holdings down 9.6% and GE down 2.8%. Consumer discretionary, staples, utilities, and real estate all lost more than 1%. High-yield bonds in HYG slipped 0.2%, a third straight decline. None of that looks like a single-stock accident. It looks like a broad, quiet markdown that cap-weighted indexes were not built to advertise.
Oil funds captured more of the move than energy stocks
The oil fund USO gained 2.7%, its second straight advance of that size, and is up 19% over the past month and 117% this year. Wednesday was another step in a move that has already doubled oil-fund holders' money, not the start of one.
USO pulled away from XLE over the past month
- USO · 149.94
- XLE · 65.31
Secretary of State Marco Rubio, in Colombia, said that when Iran tries to hit U.S. naval ships, "they're going to lose tankers." Iran launched missiles toward U.S. targets in Jordan; Jordan's military said it intercepted 18 of them.
Energy stocks did not keep pace. The energy sector fund XLE rose 0.8% and closed 0.9% below its 52-week high. Exxon Mobil, a 20% weight, rose 2.2% and Chevron 1.9%. Midstream names went the other way: Kinder Morgan fell 1.8%, ONEOK 1.7%. An energy-stock fund is not an oil proxy, and it did not behave like one.
Europe had already sold off harder. The DAX fell 1.3%, the FTSE 100 1.4%, and the CAC 40 1.9%. There was no U.S. economic release of consequence. The day's data was the crude price.
Buyers took 4.834% notes. They did not bid the yield down
The Treasury sold $39 billion of 10-year notes, a reopening, at a high yield of 4.834%, the highest 10-year auction yield since August 2007. Bid-to-cover was 2.71, against 2.53 at the August sale, which had stopped at 4.683%. Indirect bidders took $30.8 billion. Primary dealers were allotted $1.68 billion. That is not a failed auction.
Long Treasurys fell anyway. The long-term Treasury fund TLT lost 0.6% on 1.57 times its recent volume and closed at $81.74, 57 cents above its 52-week low. Intermediate Treasurys in IEF fell 0.3% and also finished next to a 52-week low. Investment-grade credit in LQD slipped 0.2% and closed 23 cents from its own. On the Treasury curve, the 10-year yield was 4.83% and the 30-year 5.28%.
The Treasury said it would buy back up to $6 billion of 10- to 20-year securities on Thursday, triple the size of its last long-dated operation. Bond prices did not rally on the announcement. The cleaner reading, and the one the auction itself supports, is that the government can still place duration at these yields. What it cannot do, with Brent above $100, is talk those yields lower.
The Federal Open Market Committee meets September 15-16. Last week Governor Christopher Waller said he would be inclined to hold the funds rate if the next stretch of data kept showing disinflation, and to consider a hike if inflation stayed hot; he had already flagged energy prices moving up again. Friday's jobs report had already complicated the hold case. A $100 barrel and a 4.83% 10-year note complicate it further. Thursday's buyback is a smaller test. The auction already showed that buyers will take duration here. They just will not pay up for it while crude is rising.
Frequently asked
Why did the S&P 500 fall only 0.5% when most funds dropped?
Meta rose 6.6% after launching an AI agent and chip names Micron and AMD added to the cap-weighted indexes, offsetting a broad decline that hit equal-weight and small-cap funds harder.
Did energy stocks track the jump in crude?
No: the oil futures fund rose 2.7% while the energy stock fund gained only 0.8%, with midstream names like Kinder Morgan and ONEOK falling outright.
Was the 10-year Treasury auction weak?
No: bid-to-cover improved from the August sale and indirect bidders took most of the notes, but buyers required the highest 10-year auction yield since August 2007.
How did the market read the strikes on Iranian tankers?
As bounded: volatility stayed modest, sector dispersion sat in the 19th percentile, and duration still found buyers.