Rising Oil Prices Continue To Rattle Investors

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Rob Black (0:12)

Feels like a very September kind of dreary day, not weather-wise, but on Wall Street. S&P 500's down 1 1⁄2%, the Dow's down 80 basis points, so a little bit more than 3⁄4 of a percent. The NASDAQ's down 2⁄3 of 1%, the Russell 2000 down 90 basis points. A lot going on, some of it a little bit of financial shenanigans with our own government buying our own debt. Bond yields tick higher as oil tops 100 The markets are focused on what's going on with treasuries. And to give you an idea, the 10-year hit 4.81, it's at 4.82 right now, 4.829. So it's ticking towards 4.83. That's enough to cause concern for some on Wall Street. Somewhere between 4.8 and 5.1 seems to advance with right now. 4.8, we don't really like it. 5.1, I think the markets would say, we're parking our money in cash. It's not a bad yield.

So taking a look at some individual names that I know are big on people's list, Meta's up very actionable 7% today. AMD's up 3%, Sandisk up 3%, Micron up 2.6%, but other than that, I don't see a lot of tech working out of the side of my eye.

The 30 year sits at 5.29%.

I think the big story this morning still, it's very September-y, in my opinion, is the S&P 500 doesn't have the earnings momentum right now. We've just ended earnings season in the last two weeks, so we have to wait a little bit longer before we start talking earnings, which is what's impressive on Wall Street right now. S&P 500 earnings are now expected to surge 34% in 2026, more than double the 15% growth expected at the start of the year. We've never seen earnings growth this strong outside of the post-recession rebounds. This time, there was no recession, just an unprecedented AI driven boom.

So the stock market right now is looking for, okay, we're not going to look for earnings. What do we look for? I think it's oil. It's the culprit. And oil leads to inflation. Crude's up roughly 3%, roughly $95.82 a barrel. Brent crude is above $100 a barrel. Tensions between the United States and Iran continue to escalate.

In today's market, when oil goes up, investors immediately start tagging the thought of inflation in their brain. And what that means for interest rates, the odds of a 25 basis point Fed rate hike next week have climbed to about 62% up from 59% yesterday. A little bit of anxiety on the fringe there, yes. At the same time, the Junior Treasury now yields about 4.81%. So investors are looking at higher oil, higher yields, geopolitical uncertainty. And they're deciding maybe today's just not the day to chase stocks. And it's not just the Middle East creating uncertainty.

You've got the silliness of what's going on with Russia and Ukraine. And when I say silly, you know what I'm saying. I'm not being glib. You've got even the sillier. The United States and Canada are engaged in our tariff wrestling match.

With Canada hitting the United States with a tally, tariffs of up to 50% on $20 billion of goods.

There's a lot happening beneath the surface right now. The AI spending arms race continues.

Amazon is tapping debt markets again with its first ever sterling to dominated bonds raised about $5.4 billion.

Meanwhile, Google's parents Alphabet is investing roughly $15 billion in AI infrastructure in Finland.

Between those two stories this morning, it's pretty clear the AI buildout not slowing down. Investors are getting another reminder that not every growth story is working. Casey's General Store is down nearly 10% after reporting solid sales and earnings, but high gasoline prices have hurt fuel volumes, slowed the pace of same-store sales growth. This is the kind of stock, I'm not telling you this is the stock, but this is the kind of stock that has such a great track record over the last five years that I do become very interested on 10 to 20, 30 percent pullbacks.

If the story is not broken, if it's truly that gasoline prices hurt fuel volumes, as gasoline prices crept up, some people have said, okay, I'm only going to fill up my tank a little bit. You still got to fill it up eventually. That's a little bit of a mind game, but I hear you. Maybe price come down and that is important to people.

This morning, if I were to sum up, you got higher oil, higher yields, geopolitical risks and tariffs weighing on stocks. But at the same time, you get enormous amounts of money still pointing to AI, infrastructure, space, next generation technologies. That's the push and the pull in the market right now. Short-term uncertainty versus potentially very powerful long-term investment cycle.