Oil Prices Leap to Their Highest Since May

US stocks sank on Thursday after oil prices jumped back to where they were in May.

• The S&P 500 fell 44.66 points, or 0.6%, to 7,591.70. its fourth straight loss.
• The Dow Jones Industrial Average fell 316.56 points, or 0.6%, to 52,064.10.
• The Nasdaq composite fell 171.62 points, or 0.7%, to 26,081.72.

Stocks sank under the weight of rising oil prices. Brent crude, the international standard, climbed another 6.3% and briefly topped $108 per barrel for the first time since May before settling at $107.63, the AP reports. Treasury yields leaped in the bond market on increased worries about inflation, and the 10-year yield jumped to 4.95%. That's up nearly a whole percentage point since the war with Iran began.

The rising 10-year Treasury yield is making mortgages more expensive, which is hurting the housing industry. A report on Thursday said sales of previously occupied US homes fell in August to their slowest pace in more than a year, in part because of rising mortgage rates. That helped send stocks of homebuilders lower, including drops of 3.5% for Lennar and 2.4% for DR Horton.

• Elsewhere on Wall Street, Macy's fell 4.7% even though the retailer reported stronger profit and revenue for the latest quarter than analysts expected. It also raised its forecasts for earnings this fiscal year, but it warned that "there are macroeconomic and geopolitical factors that could influence" how much its customers feel comfortable spending.
• Macy's said it received $116 million in tariff refunds from the government—$98 million during the quarter and another $18 million after the quarter ended. Macy's CEO Tony Spring told the AP Thursday that the company is using some of the proceeds to lower prices on certain items like furniture and other big-ticket purchases.

Oil prices have been jumping since early July, when Brent crude was going for less than $72 per barrel, as hopes fade that the war with Iran will allow oil to flow freely from the Middle East anytime soon. The jump has pushed the price for a gallon of regular gasoline to an average of nearly $4.28 across the United States, according to AAA. That's up nearly 34% from a year earlier and is not only costing people more at the pump but also through higher prices for all kinds of products that move by truck to store shelves.

• A report on Thursday showed that inflation at the US wholesale level accelerated to 5.4% last month from 4.8% in July, and retailers could eventually pass such increases in prices onto shoppers. A report is coming on Friday that will show how much inflation US consumers are feeling.

• The typical move to rein in high inflation is for the Federal Reserve to raise its main interest rate, the federal funds rate. Another report on Thursday suggested the US job market may remain solid, as fewer workers applied for unemployment benefits last week. That could give the Fed more confidence that the economy may be able to withstand higher interest rates.
• Following Thursday's reports, traders see a roughly 73% chance the Fed will raise the federal funds rate at its meeting next week. That's up from the 61% probability seen the day before, according to data from CME Group. That's also despite President Trump's consistent lobbying for interest rates to go lower rather than higher.
• The Fed's counterpart in Europe, the European Central Bank, raised its own interest rates on Thursday in hopes of getting inflation in check. It cited "the conflict in the Middle East" and how it "continues to generate inflation pressures."