Oil reloads, yields follow. August still wins

Rundown · 2026-09-01

Five days after the war premium came out, it went straight back in. US forces struck Iranian rocket launchers on Larak Island, Iran hit US bases in Jordan, WTI settled up 2.83% at $85.76 and the 10Y rose a fourth straight session to 4.76%, its highest since January 2025. September hike odds are now around 65%. And August still finished up 2.6% on the S&P.

Market Performance

Dow: 53,185.90 (-0.70%) — -374.09 pts, by far the weakest of the three
S&P 500: 7,686.14 (-0.33%) — -25.62 pts
Nasdaq: 26,370.89 (-0.12%) — -31.53 pts, held up by Tesla and Nvidia
Russell 2000: 2,956.44 (-0.54%) — -15.93 pts
10Y: 4.76%, up about 3-4bp — a fourth consecutive rise and the highest since January 2025 · 30Y: 5.25%, +5bp · 2Y: about 4.36%
WTI settled $85.76 (+2.83%, +$2.36) · Brent $90.56 (+2.71%) · Gold $4,481.50 (-1.07%) · Bitcoin about $78,040 (-0.31%)
August, final: S&P +2.6% — its first monthly gain since May — Nasdaq about +3.9%, Dow +1.3% for a fifth consecutive winning month, Russell about +1.4%
August sector leaders were technology (about +6%), with materials, health care and energy each above +5%. The laggards were utilities at -3.6% and industrials at -1.5%

The shape matters more than the size. The Dow lost 374 points while the Nasdaq lost 31 — this was not a tech sell-off, it was a rate-and-liability sell-off, and the megacap growth names were the part of the market that held.

The Strikes Resume, and Oil Reprices

US forces struck two Iranian rocket launchers on Larak Island on Sunday, which US Central Command said were preparing to lay mines in the Strait of Hormuz
Iran's Revolutionary Guard retaliated against US bases in Jordan, and warned of increasingly forceful counterattacks
This was the first publicly acknowledged US strike on Iranian positions since late July — it ended roughly a month of quiet
WTI settled at $85.76, up 2.83%, and Brent closed back above $90 at $90.56, up 2.71%
Look at what that undoes. Six sessions ago crude was $87 and falling on a Hormuz framework; on Thursday it was $82.90; Friday it settled $83.40 — the premium came out over a week and went back in over a weekend
That is the tell on this whole conflict. The market keeps pricing resolution and keeps having to take it back, because nothing structural has changed: Iran has said all along that the Strait stays conditional
The consumer-facing version is already visible. Gasoline averaged above $4 a day in August for the first time, and Monday's move pushes the next print higher again

Rates Won't Stop

The 10Y rose for a fourth straight session to 4.76%, its highest level since January 2025. The 30Y added 5bp to 5.25%
Fed funds futures now price roughly 65% odds of a September hike, against about 57% at Friday's close and around 35% before Warsh spoke — the repricing did not fade over the weekend, it extended
The mechanism is oil. Warsh's complaint on Friday was that goods disinflation was doing the work while services stayed sticky. Crude rising 2.8% takes away the half that was working
The real-economy transmission is already showing: the 30-year fixed mortgage rate reached 6.87%, its highest since June 2025
Gold fell 1.07% to $4,481.50 on the higher real rate, though it still finished August up about 10% — its best month since February
Note what did not happen. Equities did not break. A month-end session with new strikes, higher oil, a fourth day of rising yields and hike odds at 65% produced a 0.33% decline in the S&P

California Rewrites the Utility Trade

Edison International fell 23%, its worst single session since the 2001 California energy crisis. PG&E fell about 19%
The cause was legislative, not operational. California lawmakers introduced a wildfire bill on Saturday that leaves investor-owned utilities squarely on the hook for fire liability, rejecting the central provision of Governor Newsom's plan to shift that exposure to the state
Lawmakers also rejected a proposal to strip insurers of their subrogation rights, which was the other half of the relief the sector had been positioned for
At least three analysts cut their recommendations on the day, and the companies' bonds weakened alongside the equity — a spread move, not just a sentiment move
This is why utilities were August's worst sector at -3.6% in a month everything else rose. The sector was carrying a policy option and the policy went the other way
The wider lesson for anyone holding regulated names: the liability regime is the asset. Rate base and load growth are worth nothing if a legislature can leave you uncapped

Notable Movers

(EIX) -23% — Edison International's worst day since 2001, after California's new wildfire bill declined to cap or transfer investor-owned utility liability. The stock had been priced for the relief that did not arrive
(PCG) -19% — PG&E caught in the same bill, with bond spreads widening alongside the shares
(AON) -7% — Agreed to buy USI Insurance Services from KKR for $17B in cash, closing expected in Q4. USI is the tenth-largest US broker, about $3B in revenue and 10,500 staff. The stock fell because the deal freezes buybacks and adds leverage, following Aon's $13B purchase of NFP in 2024. KKR made roughly six times its 2017 investment
(TSLA) +5.5% — Closed at $367.95 ahead of the Cybercab launch event in Austin on Thursday, with renewed positioning around robotaxi, FSD and Optimus
(PINS) -4% — CFO Julia Brau Donnelly resigned to join a private early-stage company; she stays through October 30 and an interim successor was named. The news broke Friday after hours, so Monday was the first full session to price it
(AMZN) -3% — The FTC and 22 state attorneys general sued Amazon over what they call a secret ad surcharge scheme, alleging a hidden 2019 "soft reserve price" plus an "invented auction participant" that inflated ad prices, potentially by more than $20B. Amazon called the suit misguided and said average winning bids for sponsored product ads fell 50% from 2019 to 2025

Cross-Asset

Everything that reprices on oil or policy moved. Everything else didn't:

Asset · Level · Change · Driver

WTI crude · $85.76 settle · +2.83% · US-Iran strikes resume

Brent crude · $90.56 · +2.71% · Back above $90

10-Year yield · 4.76% · up a fourth session · Highest since January 2025

30-Year yield · 5.25% · about +5 bps · Long end following oil

Gold · $4,481.50 · -1.07% · Higher real rates, still +10% in August

Bitcoin · about $78,040 · -0.31% · Quiet, as it has been for a week

The 30-year mortgage rate at 6.87% is the number to hold onto. It is the highest since June 2025 and it is the channel through which all of this reaches households
Gold's August was still its best month since February at about +10%, which tells you Monday's 1.07% give-back is a rate move rather than a change in the bid for hard assets
Bitcoin has now been flat for a week after its 22% run. Nothing in the crypto complex is responding to the rate repricing either way

Private Dealmaking

Aon agreed to acquire USI Insurance Services from KKR — $17B in cash, closing expected Q4 2026 (M&A, not a raise)
SLB agreed to acquire Kelvion, a German thermal management and heat-exchange business, from Apollo and Triton — $3.4B in cash plus about $0.7B of assumed debt, roughly $4.1B total at about 11x 2026 EBITDA
AusperBio (chronic hepatitis B therapies · Series C, taking total raised to $360M) — $120M
Hopscotch Primary Care (tech-enabled rural primary care · Series D, announced August 18) — $53M
Gallos Technologies (UK defense-tech investor and venture builder · announced August 17) — $50M
Deep Cogito (self-improving hybrid reasoning models) — $43M

The SLB deal is the one worth a second look. An oilfield services company just paid roughly $4.1B for data-center cooling — AI capex is now pulling in industrial businesses that have nothing to do with software, at eleven times earnings.

What To Watch

Today: July JOLTS. The first of three labor reads in four days, and the one that shows whether hiring demand is still contracting quietly
Wednesday: ADP private payrolls
Friday: August nonfarm payrolls, expected around 65,000 with unemployment at 4.2%
That 4.2% forecast is the whole week. Warsh said on Friday that 4.1% is "consistent with full employment." A tick up to 4.2% puts the print exactly at the Fed's own longer-run estimate and takes some of the urgency out of the hawkish case
A weak payrolls number is the only thing on the calendar that can move September odds back down. Everything else — oil, the mortgage rate, sticky services — pushes the other way
September 8: Canada's retaliatory tariffs take effect, matching dollar for dollar
September 9: the first enlarged Treasury buyback operation, and the long end could use it at 5.25%
September 16: the FOMC decision. Two CPI prints and this week's labor data stand between here and there

TLDR

Dow -374.09 (-0.70%), S&P -0.33% to 7,686.14, Nasdaq -0.12%, Russell -0.54% — the Dow took the damage, not tech
US forces struck Iranian rocket launchers on Larak Island; Iran hit US bases in Jordan. WTI settled +2.83% at $85.76, Brent back above $90
The 10Y rose a fourth straight session to 4.76%, its highest since January 2025; 30Y 5.25%; September hike odds about 65%, from 35% pre-Warsh
The 30-year mortgage rate hit 6.87%, highest since June 2025
EIX -23%, its worst day since 2001, and PCG -19% after California's wildfire bill left investor-owned utilities uncapped on fire liability
AON -7% on a $17B cash deal for USI that freezes buybacks; AMZN -3% as the FTC and 22 states sued over a hidden ad surcharge worth potentially $20B+; TSLA +5.5% into Thursday's Cybercab event
August closed green anyway: S&P +2.6% (first monthly gain since May), Nasdaq about +3.9%, Dow +1.3% for a fifth straight winning month

The Bottom Line

Three separate things went wrong on Monday and the index fell a third of a percent. Strikes resumed in the Strait and crude took back in one weekend the entire premium it had shed over the previous week. The 10-year rose for a fourth straight session to a level it has not seen since January 2025, hike odds went to 65%, and the 30-year mortgage reached 6.87%. A California bill erased a quarter of Edison International in a single session. None of it dented the S&P, because the market has decided that earnings are the thing and policy is background noise. That reading gets tested on Friday. Payrolls are forecast at 65,000 with unemployment ticking to 4.2% — one notch above the level Warsh called full employment three days ago. A soft print is the only exit the doves have left on the calendar, and a firm one leaves the September meeting looking a great deal more live than equities are currently pricing.

_For informational purposes only. Not investment advice._