Oil at 3-Week Low on Iran Hormuz Proposal; Stocks Mixed

WTI crude fell nearly 1% to a 3-week low after Japan's Kyodo News Agency reported that Iran has proposed to reopen the Strait of Hormuz within seven days if the US blockade of Iranian ports is lifted.

October WTI futures (CLV26) extended losses as diplomacy signals multiplied. A spokesman for Iran's Islamic Revolutionary Guard said that "if our national interests require us to negotiate alongside the war, we must negotiate." People familiar with the matter said Saudi Arabia is in the early stages of restarting its East-West pipeline and resuming crude exports from its Red Sea port of Yanbu later this week.

Cheaper oil eased inflation risks, lowered bond yields early in the session, and supported risk appetite. The S&P 500 ($SPX) (SPY) posted a 5-week high and closed up 0.01%. The Nasdaq 100 ($IUXX) (QQQ) gained 0.43% at a 3.5-month high. The Dow Jones Industrial Average ($DOWI) (DIA) fell 0.41%, dragged down by sliding financial stocks. December E-mini S&P futures (ESZ26) rose 0.03%, and December E-mini Nasdaq futures (NQZ26) rose 0.45%.

Indexes retreated from their best levels after two hawkish data points. The September Richmond Fed manufacturing survey fell 6 points to -2, a 7-month low and well below expectations of 2. Boston Fed President Susan Collins then said she saw an "increased likelihood" of scenarios in which inflation remains "notably above 2%," suggesting she may favor additional Fed tightening. T-note yields moved higher on her remarks.

Markets are discounting a 53% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28, and a 46% chance of a +25 bp ECB hike at the ECB's October 29 meeting.

Bonds and rates

December 10-year T-notes (ZNZ6) fell 2 ticks, with the 10-year yield up 0.8 bp to 4.959%. T-notes gave up an early advance on Collins's comments. Supply pressure added to the bearish tone: the Treasury will auction $211 billion of T-notes and floating-rate notes this week, starting with $69 billion of 2-year T-notes.

European yields were mixed. The 10-year German bund yield slid to a 1.5-week low of 3.422% and stands 1.0 bp lower at 3.448%. The 10-year UK gilt yield touched a 2-week low of 5.166% and is up 0.8 bp at 5.219%.

The Eurozone September consumer confidence index fell 1.0 to -16.5, weaker than expectations of -16.0. ECB Chief Economist Philip Lane said a new wave of high energy prices means Eurozone inflation will stay elevated longer than the ECB initially anticipated.

Overseas equities rose. The Euro Stoxx 50 hit a 1.5-week high, up 0.28%. China's Shanghai Composite closed up 0.067% at a 2-week high. Japan's Nikkei-225 did not trade, with markets shut for a national holiday.

Movers

Chipmakers and AI stocks supported the market. The iShares Semiconductor ETF (SOXX) rose 0.55% to a 5-week high. SanDisk (SNDK) gained more than 5%. Micron (MU), Marvell (MRVL), and Western Digital (WDC) each rose more than 2%. Seagate (STX) and ARM Holdings (ARM) advanced more than 1%.

Financial stocks slid. Charles Schwab (SCHW) fell more than 6% to lead S&P 500 losers. Raymond James (RJF) dropped more than 5%. Morgan Stanley (MS), JPMorgan Chase (JPM), and Wells Fargo (WFC) fell more than 3%. Bank of America (BAC), Citigroup (C), Northern Trust (NTRS), and US Bancorp (USB) lost more than 2%.

Viking Therapeutics (VKTX) surged more than 24% after a study showed patients taking its VK2735 GLP-1 weight-loss drug maintained up to 97% of weight loss versus 61% for placebo. Vicor (VICR) rose more than 13% after raising Q3 revenue growth guidance to over 20% q/q from a previous estimate of 10%, citing royalties from a non-exclusive license to Vertical Power Delivery. Shopify (SHOP) jumped more than 7% to lead Nasdaq 100 gainers after announcing it was "partnering deeply" with Meta Platforms' Muse artificial intelligence agent.

AutoZone (AZO) gained more than 6% after reporting Q4 EPS of $56.05, beating the consensus of $54.03. Amgen (AMGN) rose more than 4% to lead Dow gainers after saying the primary endpoint was met in a Phase 3 study of its dazodalibep drug in adults with Sjogren's disease. Quest Diagnostics (DGX) fell more than 4% and Labcorp (LH) more than 3% after CMS released new preliminary Medicare payment rates for lab services.

Stocks also drew support from anticipation of this week's summit between Presidents Trump and Xi Jinping. Whether oil keeps falling — and whether Collins's hawkishness spreads among Fed policymakers — will shape the tape into the October 27-28 FOMC meeting.