Oil above $100 lifts yields, stocks fall again

US stocks closed lower for a fourth day in a row on Thursday. The S&P 500 fell 0.6% to 7,595.30, the Dow Jones Industrial Average fell 0.6% to 52,056.79, and the Nasdaq 100 dropped 1.1% to 29,119.46. Brent crude, the global oil benchmark, jumped about 3.6% to $105.37 a barrel, while the 10-year Treasury yield climbed to roughly 4.95%, its highest in a year.

Almost everything today ran through the price of oil. Crude has been climbing on Middle East tensions, and because oil is an input to nearly everything that gets made, shipped, or flown, a jump in crude works its way into the cost of other goods within weeks. That was already visible in Thursday morning's producer price index, the monthly government measure of what businesses charge each other before anything reaches a store shelf, which rose 0.4% in August and 5.4% from a year earlier, up from 4.8% the month before.

Hotter inflation changes what investors expect from the Federal Reserve, the US central bank that sets short term interest rates. Rather than the cuts markets spent much of this year anticipating, traders moved to roughly 70% odds that the Fed raises rates at its meeting next week, and the bond market repriced to match. Yields across Treasury maturities hit 52-week highs, with the 30-year around 5.35%. A Treasury yield is the annual return the US government pays to borrow money, and when it rises, two things happen to stocks. Safe government bonds start paying enough to compete with shares for investors' money, and profits a company expects to earn years from now become less valuable in today's terms, because that money could instead be sitting in a bond earning close to 5% in the meantime. That second effect lands hardest on fast growing technology companies, whose value rests mostly on distant future earnings, which is why chipmakers led the decline. Micron fell about 4.6%, Intel about 5.6%, and Nvidia about 2.1%. Apple was the day's exception, rising close to 3% on new product news.