S&P 500 Sheds 1.2% as Oil Hits $100 on Gulf Tensions

Thursday was a risk-off session with no shelter. Equities fell, oil jumped, and both the dollar and Treasury yields caught bids.

The S&P 500 closed down 1.2% at 7,408, off its session lows but still down. The Nasdaq 100 shed nearly 2%, and the Dow Jones lost 1%. Breadth showed 213 names higher on the S&P 500, with 290 lower. Seven of eleven sectors closed in the red. Intel's earnings landed after the close, too late to shift the day's tone. The stock carries an AlphaScala score of 35 out of 100 with a mixed label.

Overnight in Asia, the same pattern held. Japan's Nikkei, the Topix, and South Korea's KOSPI all ended lower, the broader tech pullback and the jump in oil prices outweighing any positive Intel headlines.

Oil prices dominated the macro picture. Brent crude touched $100 a barrel, up nearly 40% in July alone. The move followed Yemen's Houthis saying they had attacked two Saudi oil tankers in the Red Sea. President Trump told Axios a decision on a "massive attack" against Iran is close. "At this point, it is a guessing game about where this goes," said FP Markets chief market analyst Aaron Hill. "Unless there is something concrete in terms of a deal between the US and Iran, oil remains higher." Technically, Brent has room to target $104.05, with $100 potentially serving as a support pocket, Hill said.

The rally in oil lifted the dollar index. USD/JPY pushed to just shy of ¥164, a level not seen since late 1986. Hill said the next resistance on the daily chart is ¥167.80, though he does not expect the pair to reach that level before Japan's Ministry of Finance steps in. For bonds, yields rose as the OIS market priced in nearly 40 basis points of Fed tightening, up from just 25 bps a week ago, with inflation expectations climbing alongside the oil spike.

Today's focus shifts to the first batch of July flash S&P Global PMIs for manufacturing and services. France and Germany report at 7:15 a.m. and 7:30 a.m. GMT, followed by the eurozone aggregate at 8 a.m., the UK at 8:30 a.m., and the US at 1:45 p.m. The fieldwork ran through the re-ignited Middle East tensions and the return of $100 crude, so today's readings should capture more of the cost and confidence hit than June's survey did, Hill said.