Disinflation Meets Escalation

U.S. equities declined as renewed Middle East conflict lifted oil prices, but cooler-than-expected CPI and PPI data eased July rate-hike fears, limiting broader market weakness despite flaring Iran tensions. Oil surged as shipping through the Strait of Hormuz slowed sharply, reviving supply concerns and pushing gasoline prices higher after several weeks of easing energy-market pressure across global markets. Bond yields edged lower after softer inflation data reduced expectations for an imminent Fed hike, even as markets remained wary that renewed oil strength could complicate the policy outlook ahead. Snapping a two-week winning streak, the S&P 500 declined 1.5% on the week, while the tech-heavy Nasdaq 100 dipped 4.2% as chip stocks and other AI-linked leaders came under renewed pressure. REITs outperformed as Prologis delivered strong earnings, raised guidance, and improved its outlook for U.S. industrial fundamentals, while broader real estate sectors benefited from healthier overall market breadth this week.

U.S. equity markets finished mostly lower this week, as a renewed escalation in the Iran conflict drove a sharp rebound in oil prices, but cooler-than-expected inflation data helped cushion the broader market.