Stocks, Bonds Fall as Mideast Strikes Lift Oil: Markets Wrap

Traders work on the floor of the American Stock Exchange (AMEX) at the New York Stock Exchange (NYSE) in New York, US, on Friday, June 5, 2026. Wall Street's historic weekly run is poised to come to a halt, with stocks and bonds falling after a solid jobs report added to speculation the Federal Reserve's next interest-rate move will be a hike. Photo by Michael Nagle /Bloomberg

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(Bloomberg) — Stocks and bonds dropped as investors grappled with rising oil prices, mounting bets on US interest rate hikes and a pullback in the artificial-intelligence trade.

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Europe’s Stoxx 600 fell 0.6%. Brent crude climbed 4.6% to above $97 a barrel after Israel retaliated against Iranian missile attacks. Yields climbed across the world, with the rate on 10-year Treasuries up four basis points to 4.57% as traders almost fully priced in two Federal Reserve hikes over the next 12 months.

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Asia’s main stock benchmark fell 3.2%, tracking the rout in AI stocks in the US on Friday. South Korea’s Kospi index tanked 8.3%. US stock futures steadied after the selloff, with contracts on the S&P 500 up 0.3% while those for the Nasdaq 100 rose 0.6%.

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The retreat marks the biggest test in weeks for an equity bull market that has been fueled by a blistering rally in tech and hopes that calm would return to the Middle East. Investors are now contending with a plethora of negatives: doubts over whether the rally has run too far, renewed fighting in the Middle East and inflation pressures that are bolstering the case for rate hikes.

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“In the longer run, this will prove to be a technical correction, albeit a scary one in a longer-term bull market,” Goldman Sachs Group Inc. Chief Asia Pacific regional equity strategist Tim Moe said on Bloomberg TV.

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Stocks related to chipmakers and software were weak across Europe, with ASM International NV, ASML Holding NV and Nemetschek SE falling more than 2%. In Asia, Samsung Electronics Co. tumbled as much as 11%, SK Hynix Inc. lost 10% and Taiwan Semiconductor Manufacturing Co. slid 5.7%.

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What Bloomberg Strategists Say…

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“The equity market’s two key drivers, AI and energy, have both turned negative, pointing to downside for stocks. While the weakness in tech looks more like a correction than the start of a bear market, investors are heading into two weeks packed with event risk just as oil prices are moving higher again. It is difficult to argue for adding risk in the near term.”

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— Skylar Montgomery Koning, macro strategist. For the full analysis, click here.

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A flood of new shares from companies looking to fund their AI ambitions is also raising questions on Wall Street about whether there will be enough buyers to soak them all up.

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Meanwhile, Bitcoin climbed 2.1% to above $63,000 after falling below the $60,000 mark on Friday for the first time since Donald Trump won reelection in 2024. 

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In geopolitical news, Israel said it struck several military targets in Iran, retaliating against missile attacks by Tehran despite Trump’s call for Prime Minister Benjamin Netanyahu to refrain from hitting back.

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The exchange is one of the most serious tests of a ceasefire that took effect on April 8 to halt fighting involving the US, Israel and Iran. It comes as the US and Iran appear to be making little progress toward an interim agreement to end the war, even as Trump has repeatedly said a deal is near.