Markets slide as Mideast tensions drive oil and Treasury yields higher

The Dow Jones Industrial Average dropped 628.18 points, or 1.18%, settling at 52786.07 as investors recalibrated for a period of heightened geopolitical risk. The S&P 500 declined 0.58%, while the Nasdaq Composite retreated 0.32%. Energy markets reacted sharply, with crude futures climbing 1.7% to $93.03 a barrel—the highest New York settlement since early June. The strikes targeted civilian and economic facilities in Jazan, Najran, Abha, and Khamis Mushait, further straining a region already reeling from reports of U.S. naval vessels coming under fire.

Bond markets signaled deeper anxiety as the yield on the 10-year Treasury note climbed to 4.805%, marking an almost three-year high. The two-year yield hit 4.396%, its highest point since January 2025, while the 30-year bond closed near 19-year peaks. Eric Marshall, president of Hodges Capital, noted that the core challenge for investors is distinguishing between inflation driven by transient, conflict-related oil price spikes and the underlying structural strength of the domestic economy. These moves arrive just days before the release of critical inflation data, which will likely determine if the current market volatility persists.