Stocks retreat as U.S. oil prices top $100, threatening economy

Stocks dropped Thursday after U.S. oil prices topped $100 a barrel, amid growing fears of higher inflation from a prolonged war in the Middle East.

The Dow Jones Industrial Average dropped 284 points, or 0.5%. The S&P 500 fell 0.4%, while the Nasdaq Composite slid 0.4% too.

Higher oil prices continued to weigh on sentiment, as the war between the U.S. and Iran stretched into a seventh month. U.S. West Texas Intermediate futures for October jumped above $100 per barrel. Futures for the international benchmark Brent crude for November delivery spiked above $105 a barrel.

The jump in oil prices pushed the 10-year Treasury yield above 4.9%, the highest level since November 2023.

High beta chip stocks that have led the bull market traded lower on fears higher rates and oil could slow the economy. Intel and Micron Technology both fell 5%.

A tame wholesale inflation report failed to allay fears coalescing around higher rates and oil prices. August's producer price index, a measure of wholesale inflation, rose a seasonally adjusted 0.4% for the month, in line with the Dow Jones consensus. On an annual basis, that put PPI at 5.4%, which is still well above the Fed's 2% inflation target.