US stocks fell on Thursday as oil prices climbed above $100 a barrel, fuelling concerns over inflation and increasing expectations that the Federal Reserve could raise interest rates next week.
The Dow Jones Industrial Average fell 316 points, or 0.60%, while the S&P 500 declined 0.58%.
The Nasdaq Composite also dropped 0.65%. The declines came as the prolonged US-Iran war continued to disrupt energy supply routes and push oil prices higher.
Oil prices push stocks lower
US West Texas Intermediate crude closed at $102.95 a barrel, up 7.1%, marking its highest close since May 19.
WTI has gained 52.9% since the Iran war began at the end of February and is up 78.47% year to date.
Brent crude futures also climbed, trading above $108 a barrel during Thursday’s session.
Disruptions to shipping through the Strait of Hormuz and the Red Sea have raised concerns about further supply shortages.
The rise in oil prices also pushed the 10-year Treasury yield above 4.945%, its highest level since at least October 2023.
Higher yields can put pressure on equity valuations and increase borrowing costs for companies and consumers.
High-beta chip stocks, which have been among the strongest performers during the market rally, came under pressure. Intel and Micron Technology both fell 5%.
Inflation data keeps Fed in focus
A US producer price report released Thursday showed producer prices increased 0.4% in August, in line with expectations.
On an annual basis, PPI rose 5.4%, remaining well above the Federal Reserve’s 2% inflation target.
The data came ahead of Friday’s consumer price index report, which investors are watching for further clues about the Fed’s interest-rate decision.
Both PPI and CPI feed into the personal consumption expenditures price index, the Fed’s preferred inflation measure.
Fed funds futures were pricing in a 74% probability of a quarter-point rate increase following next week’s meeting.
Separate data showed traders pricing around a 70% chance of at least a 25-basis-point increase.
The rise in oil prices and Treasury yields has added to concerns that inflation could remain elevated, even as investors assess the outlook for economic growth and employment.
S&P 500 remains below record high
The major US averages entered Thursday after a three-day decline.
The S&P 500 is now nearly 3% below its record closing high from August 13, although the index remains up 11% in 2026.
Despite the recent pullback, the benchmark is trading at around 19 times expected earnings, its lowest valuation since April 2025.
The decline has come alongside a strong earnings outlook.
Individual stocks also moved sharply.
Nvidia and Micron Technology weighed on the S&P 500, while Apple rallied a day after launching its $1,999 iPhone.
Macy’s shares fell despite the department-store operator raising its annual forecasts, while American Eagle Outfitters dropped to its lowest level since October after maintaining its annual comparable-sales outlook.
Investors now turn to Friday’s consumer inflation data for further indications of how oil prices and broader inflation pressures could influence the Fed’s next policy decision.