Monday, August 31, 2026
U.S. Strikes on Iran Jolt Markets: Oil Spikes, Yields Hit 19-Month High, Rate-Hike Odds Top 60%
Key Indicators
S&P 500
7,676.49
-0.46% (down)Nasdaq Composite
26,293.58
-0.41% (down)Dow Jones Industrial Average
53,215.71
-0.64% (down)10-Year Treasury Yield
4.76%
+4 bps (up)VIX
15.14
+4.92% (up)WTI Crude Oil
$85.63
+2.67% (up)Bitcoin (BTC/USD)
~$78,000
-0.7% (down)Gold
$4,430/oz
-1.0% (down)Market Recap
Stocks slide, oil and yields jump after U.S. strikes on Iranian forces near the Strait of Hormuz
Stocks fell across the board Monday after the U.S. military struck Iranian rocket launchers near the Strait of Hormuz on Sunday, and Iran retaliated by hitting U.S. bases in Jordan — the first direct exchange of fire in roughly a month. The escalation sent WTI crude up 2.67% to $85.63 a barrel and pushed Brent above $90, reviving fears that higher energy costs will keep inflation elevated. The 10-year Treasury yield rose 4 basis points to 4.76%, its highest intraday level since January 2025, and the VIX jumped nearly 5% to 15.14 as traders priced in more risk. Fed funds futures now show roughly a 60% chance of a 25-basis-point hike at the September 16 FOMC meeting, up from about 40% just a week ago. The S&P 500 fell 0.46% to 7,676.49, the Nasdaq slid 0.41% to 26,293.58, and the Dow dropped 0.64% to 53,215.71, snapping its five-day winning streak. Even with Monday's pullback, all three indexes closed out August with gains — the S&P added 2.4% for the month, the Nasdaq 3.5%, and the Dow 1.4%, its fifth straight monthly gain, with both the S&P and Dow notching fresh records along the way.
FTC and 20+ states prepare to sue Amazon over alleged ad-price manipulation; shares fall over 3%
The FTC and more than 20 state attorneys general are preparing to sue Amazon in federal court in Seattle, alleging the company secretly hiked the minimum prices advertisers had to pay for ad placements after a 2018 change to its ad-auction strategy — deceiving advertisers while pocketing tens of billions of dollars over seven years. It would be the FTC's third major case against Amazon. Shares fell more than 3% on the news, wiping out roughly $86 billion in market value, as investors weighed the potential penalties and reputational damage to Amazon's fast-growing advertising business.
Tim Cook's last day as Apple CEO: John Ternus takes over as AAPL bucks the market's slide
Monday marked Tim Cook's last day as Apple's CEO after a 15-year run that began in 2011; hardware engineering chief John Ternus takes over Tuesday, with Cook staying on as executive chairman to help with policy matters. In a farewell memo, Cook praised Ternus as someone who understands "what it takes to build products that change the world." The handoff comes on the back of a record fiscal third quarter, with revenue up 16% year-over-year to $109.4 billion. Apple shares bucked the market's broader decline, rising 1.63% Monday and finishing August up roughly 3.6% even as the S&P 500 slipped on the day.
Tesla jumps 5.2% on Model 3 price cut in Asia; Alphabet, Goldman, Caterpillar lag as energy outperforms
Tesla was the standout gainer, climbing 5.2% after cutting the price of its entry-level Model 3 by roughly 8.5% in Hong Kong and Macau, a move investors read as a sign the company is fighting harder for share in competitive Asian EV markets. Elsewhere, the day's geopolitical and rate-hike jitters hit growth and industrial names: Alphabet fell about 2.3%, while Goldman Sachs and Caterpillar each dropped roughly 1%. Energy stocks were the lone bright spot sector-wide, rising about 0.9% as the group tracked crude's jump.
Concept of the Day
Fed Funds Futures & Rate-Hike Odds
When you read that traders see a "60% chance" of a Fed rate hike, that number isn't a guess or a poll — it's derived mathematically from prices in the fed funds futures market. These are contracts traded on the CME that settle based on the average effective fed funds rate during a given month. Because the contract's price reflects where traders collectively expect the rate to land, you can back out an implied probability for any given outcome (hold, hike, or cut) at the next FOMC meeting. The CME's FedWatch tool automates this calculation and publishes it in real time, which is why financial media can report a specific percentage — like today's roughly 60% odds of a 25-basis-point hike on September 16 — the moment new information hits the market. Those odds move constantly as new data arrives: a hot inflation print, a hawkish Fed speech, or, as happened this week, a spike in oil prices that raises the odds the Fed will need to fight inflation with higher rates. It's important to remember these are market-implied probabilities, not certainties or Fed guidance. They represent the aggregated bets of thousands of traders and can be wrong — right up until the moment the Fed's decision is announced, at which point the odds resolve to either 0% or 100%.
Why it matters
This matters directly to what happened today: energy-driven inflation fears pushed the implied odds of a September hike from about 40% to roughly 60% in a single week, and that repricing is a big reason the 10-year Treasury yield jumped to its highest level since January 2025 and stocks sold off. For investors, tracking these odds isn't academic — a market that's pricing in a hike reacts very differently to the same economic data than one pricing in a cut, and positioning ahead of a Fed decision (in bonds, rate-sensitive stocks, or the dollar) depends heavily on where these odds sit.
What to Watch
Tue, Sep 1
ISM Manufacturing PMI (August)
First look at whether factory activity is holding up as tariffs and now pricier oil squeeze manufacturers.
Thu, Sep 3
ISM Services PMI (August)
Services make up the bulk of the U.S. economy, and the prices-paid component is a key real-time inflation signal ahead of the Fed's September meeting.
Fri, Sep 4
August Jobs Report (Nonfarm Payrolls)
The last major jobs data before the September 16 Fed meeting — a hot report would add to this week's already-rising rate-hike odds.
Fri, Sep 11
Consumer Price Index (August)
The last inflation reading before the Fed's September decision, and especially important given this week's oil-driven inflation scare.
Wed, Sep 16
FOMC Rate Decision
The Fed's decision on whether to raise rates, with fed funds futures now pricing in roughly 60% odds of a 25-basis-point hike after this week's escalation.