The three major U.S. stock indexes closed slightly lower, Russell 2000 fell 0.92%, oil prices surged past $95 boosting rate hike expectations, gold regained $4150.

U.S. Stock Market Performance

According to Golden Pattern APP, the three major U.S. stock indices fell under pressure and closed lower on Wednesday. The S&P 500 Index closed down 0.14% at 7498.96 points, the Dow Jones Industrial Average slipped 0.01% to 52218.58 points, the Nasdaq 100 Index dropped 0.54% to 28998.101 points, and the Russell 2000 Index lost 0.92% to 2959.938 points.

The gains from yesterday’s short covering were largely erased, as the market remained cautious under the dual pressure of rising oil prices and revived interest rate hike expectations.

Oil Price Shock

Brent crude broke above $95/barrel during intraday trading, and WTI closed up 2.3% at $86.30/barrel. The ongoing escalation of the Middle East conflict, continuous U.S. military strikes against Iranian targets, Trump's tough stance, Iran's warnings of retaliation, and Houthi threats to Red Sea shipping have collectively heightened energy supply risks.

Institutions such as Saxo Bank pointed out that the oil price surge reflects ongoing conflict, shipping threats, and supply tightness. Ian Lyngen, an analyst at BMO Capital Markets, emphasized that there are no signs of easing in military attacks, and the rise in energy prices continues to pressure the market.

Treasury Yields

Oil prices drove up inflation expectations, pushing the U.S. two-year Treasury yield to its highest since February 2025, and the 30-year yield to around 5.14%. Monetary market bets on rate hikes for the next year jumped 5-6 basis points in a single day. The CME FedWatch tool shows the probability of a rate hike in September is close to 80%.

Thomas Martin, Senior Portfolio Manager at Globalt Investments, commented that U.S. inflation remains high, and the market’s real concern is the future path of interest rates.

Gold Performance

Supported by both risk aversion and inflation, spot gold climbed back above $4150 during intraday trading, rising 1.3% on the day to $4131.42/ounce. Geopolitical risks and the transmission effect from oil prices once again highlighted the defensive value of gold.

Tech Stocks Updates

Nvidia rose 2.30%, AMD gained 1.45%, but Meta fell 2.58%. Tesla and Google came under pressure after hours. Super Micro Computer surged nearly 20%, and Dell climbed over 9%. The AI capital expenditure story continues, but the market has become more sensitive to the rate path.

Google Cloud business significantly outperformed expectations, with contractual backlog exceeding $500 billion; Several tech giants are ramping up data center investment, and OpenAI's cloud spending forecast was raised to $750 billion.

Market Outlook

The market is currently facing a triple test of oil prices, geopolitical conflicts, and Fed policy expectations. Tech stock valuations are under pressure from interest rates, but the long-term growth logic for AI remains unchanged. Investors should watch signals from next week’s Fed meeting and developments in the Middle East situation.

Editor’s Summary

The breakout in oil prices and reignited rate hike expectations are dominating market sentiment, with U.S. stocks pulling back slightly while gold strengthens, reflecting the risk repricing process. Clarity of policy direction and the degree of improvement in geopolitical tensions will be key to market trends going forward. In the medium to long term, AI and energy transition themes still have allocation value, but risk management should be enhanced.

FAQs

Q: How does the rise in oil prices impact U.S. stocks and the bond market?

A: Oil prices breaking above $95 push up inflation expectations, causing long-term yields to rise and increasing the probability of a rate hike. This directly pressures rate-sensitive tech and growth stocks, while the energy sector remains relatively strong.

Q: Why does gold strengthen when U.S. stocks are under pressure?

A: Prolonged geopolitical conflicts offer safe-haven support, and inflation worries triggered by rising oil prices activate gold’s anti-inflation attributes. These two factors have a positive resonance, sending gold prices back above $4150.

Q: Why has the probability of a Fed rate hike in September risen sharply?

A: The surge in energy prices drives up inflation expectations and bets in the money markets have jumped. The CME FedWatch tool indicates a nearly 80% probability of a rate hike in September. The market is concerned about the transmission effect of oil prices on consumer goods prices.

Q: What indications do tech giants’ earnings give to the market?

A: Google Cloud’s much stronger-than-expected performance shows robust AI capital expenditures, while Tesla’s weaker results highlight divergences. Overall, earnings growth expectations have rebounded, but the rate of revenue beats has declined, and the market is paying more attention to pricing power and cost control.

Q: What strategies should investors adopt now?

A: In a more volatile environment, it's advised to balance allocations between defensive assets and growth themes. Use tools like the Golden Pattern APP to monitor long/short signals and support/resistance levels. Control position sizes, pay attention to the Fed meeting and Middle East diplomatic developments, and be prepared for periodic risk hedging.

The ongoing lack of easing in Middle East tensions and the oil price shock are reshaping market expectations for inflation and policy, with gold and the energy sector showing strong resilience.