Brent crude surges above $100, US stocks tumble, 10-year yield breaks 4.7%

• U.S. equities fell on Thursday after Brent crude prices broke above $100 per barrel once again.
• The rise in oil prices follows the 12th consecutive night of U.S. strikes against Iran and reports of an attack on a tanker off the coast of Saudi Arabia.
• While U.S. stocks initially showed little reaction to the reignited conflict, investors on Thursday began to reassess their short-sighted outlook.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., July 20, 2026. Brendan McDermid | Reuters

Major U.S. stock indexes tumbled on Thursday as investors began pricing in the consequences of a renewed and prolonged conflict in the Middle East.

Although the U.S. has conducted strikes against Iran 12 nights in a row — driving both oil prices and Treasury yields higher — domestic equities had largely brushed off the escalating war, remaining flat while oil surged.

That changed on Thursday when Brent crude futures jumped above $100 per barrel and the 10-year Treasury yield broke through 4.7%, reaching its highest level since January 2025. The moves followed reports of attacks against tankers off the coast of Saudi Arabia. The S&P 500 headed for its biggest decline in a month.

Zoom In Icon | Oil prices and S&P 500 | FactSet

"These problems became too big to ignore," said Steve Sosnick, chief strategist at Interactive Brokers, commenting on Thursday's stock movement. "It's too hard to ignore $100 oil. It's too hard to ignore 10-year rates that are above 4.70%. It's too hard for the stock market to ignore 30-year rates that are solidly above 5%."

Western Texas Intermediate crude futures jumped 6% to $92 per barrel, up more than 28% from lows below $70 per barrel hit earlier this month. The S&P 500 is now down approximately 2% since the U.S. began consecutive evening strikes on July 12.

In March, after the U.S.-Iran war began, the S&P 500 fell more than 7.5% at its low point as oil surged nearly 70% and investors worried about stagflation — a scenario where higher energy prices would reignite inflation while elevated gas pump costs weighed on consumer spending.

A series of de-escalation announcements between the two countries and a reignited faith in the artificial intelligence trade led the S&P to ferociously rebound in April and May, even as hostilities continued at various times.

Betting on Trump's Off-Ramp

The major factor behind the earlier market resilience, however, was a bet that President Donald Trump would find an off-ramp to end the war rather than face the economic and political consequences of a prolonged conflict.

"We have consistently argued since the second half of March to use the equity weakness brought on by the Iran conflict to buy into, as the off-ramp and the eventual deal were likely, in our view," wrote JPMorgan equity strategists in a note earlier this month. "The risks of renewed flareups remain, but we believe one should keep using any dips on the back of adverse geopolitical headlines in order to add."

Stock Chart Icon | S&P 500 since Feb. 27, 2026

Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, now believes traders need to reconsider the economic fears they had in March.

Investors should be concerned about both higher inflation and the impact higher gas prices may have on consumers, he said. Samana added that the reignited conflict is a reason to prepare for a larger drawdown in equities.

Sosnick noted that stocks on Thursday were also likely pricing in tighter conditions.