Four Forces Behind Last Week's Stock Market Decline
Stocks faced headwinds last week as rising geopolitical tensions in the Middle East and inflation concerns pressured markets. The S&P 500 fell 0.6%, while the Nasdaq dropped 2.1%. Oil prices surged over three consecutive weeks due to fears of an expanded U.S.-Iran conflict, with Brent crude reaching $100 a barrel for the first time since before last month's ceasefire agreement. The oil price spike reignited inflation worries and pushed up Treasury yields, increasing expectations that the Federal Reserve may raise interest rates. The probability of a rate hike at next week’s meeting rose to 35%, from just 13% one week earlier. Meanwhile, AI spending came under scrutiny as investors demanded clearer returns on capital expenditures. Alphabet reported strong earnings but saw its stock fall after raising capex guidance for the year and signaling further increases in 2027. In contrast, Intel delivered robust data center revenue growth driven by AI demand but failed to announce a major foundry customer despite rumors of partnerships with companies like Apple.
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