Wall Street opened Monday to a continuation of last week’s carnage as the Dow Jones shed over 800 points in early trade.
The indices were dragged lower by a double-shot of pain: oil surging past $100 a barrel on Monday morning and stagflation fears hardening after Friday’s devastating jobs report.
S&P 500 and Nasdaq futures both fell over 1%, with financial and industrial stocks leading the initial wave of selling.
Oil above $100 a barrel
Oil’s $100 barrier cracked Monday morning as Iran tensions showed no sign of cooling into a new week.
Brent crude surged sharply, with oil now sitting at its highest level since 2022 and continuing to grind higher as Hormuz shipping disruptions compound.
For markets, oil crossing triple digits isn’t just a headline; it’s a direct tax on every business and household simultaneously, and traders are repricing accordingly.
Coming off a jobs report that showed the US economy shed 92,000 payrolls in February, against forecasts for a 50,000 gain and the oil spike lands at the worst possible moment.
Unemployment rose to 4.4%, yet wages climbed 3.8% year over year, keeping inflation alive.
The Dow ended last week down about 3%, its steepest weekly drop since April 2025. Monday opened not as a bounce, but as a confirmation that the selloff has legs.
Bond markets are screaming the same message.
The 10-year Treasury yield rose to 4.19% Monday morning, up from 4.13% on Friday, as government bonds sold off worldwide.
When yields rise alongside falling stocks, it signals investors aren’t buying Treasuries for safety; they are pricing in inflation staying sticky, not fleeing equities for bonds.
Fed’s impossible dilemma
Monday’s market action reflects one core fear: the Federal Reserve is trapped, and everyone knows it.
Cut rates to cushion the labor market, and you throw fuel on an oil-driven inflation fire.
Hold rates while jobs evaporate, and you risk engineering the recession you tried to avoid. Neither path is clean.
Fed rate-cut bets reflect the paralysis. Traders currently put the probability of a June cut at around 51%, down sharply from earlier expectations of multiple cuts this year.
The analysts pointed out that the inflation is already high prior to anticipated energy price shocks, which will likely restrain the Fed from pursuing rate cuts soon.
The global bond rout compounds the message.
Yields are rising across Europe and the UK as the energy shock ripples through inflation expectations worldwide.
Markets that entered 2026 hoping for a coordinated global easing cycle are getting the opposite, a synchronized tightening of financial conditions driven not by central bank policy, but by geopolitical chaos.
For now, all eyes point to Friday’s PCE inflation reading, the Fed’s preferred scorecard, for any hint of policy flexibility.
If those numbers confirm what Friday and Monday suggest, the soft-landing story that kept markets buoyant heading into 2026 may be officially over.
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