0831 | S&P 500 Drops, Yields Top 4.75%, Oil Above $90, Utility Stocks Slide

Mia: Welcome to After Market on Bri Radio. I'm Mia.

Milo: And I'm Milo. Today, U.S. stocks fell as the Middle East conflict escalated, California utility shares took a hit, and the ten-year Treasury yield climbed. We'll walk through it.

Mia: U.S. equities slid on Monday, with the S&P 500 declining as the Middle East conflict intensified after the U.S. and Iran exchanged strikes for the first time in about a month. Interest-rate sensitive utilities led the drop, while gains in energy companies offset losses elsewhere alongside the oil spike.

Milo: The earnings backdrop still looks supportive. The outlook for S&P 500 earnings growth is bright after a blockbuster reporting season, and several Wall Street strategists have raised their year-end targets for the benchmark.

Mia: Technicians are cautious ahead of the S&P 500's worst month historically. Citadel Securities says the risk-reward for stocks is getting worse as that tough month kicks off, and that buying protection in the equity market right now looks compelling. Separately, Cutright is quoted saying people are trying hard to outfox the S&P 500.

Milo: California utility stocks fell sharply Monday morning after Governor Gavin Newsom and state legislators reached a deal on a bill effectively limiting utility liability tied to wildfire damages faced by insurers. S&P 500 member Edison International sold off twenty-six percent and PG&E plummeted twenty-four percent, according to MarketSurge, making them the two worst performers in the index Monday morning.

Mia: Bloomberg frames the legislation revamping California's wildfire response as rejecting Newsom's efforts to protect utilities from insurance claims arising from those disasters, and it sparked the biggest stock drop for PG&E and Edison International in years. The bill effectively limits liability related to wildfire damages that insurers face.

Milo: What's unresolved is how the legislation gets implemented and its full financial impact on the utilities. The reporting doesn't specify the bill's final terms, its effective date, or how liability costs will be allocated. The signals to watch are further market reaction and any company statements on the financial implications, neither of which is detailed in what we've seen.

Mia: On Monday the ten-year Treasury yield topped four point seven five percent for the first time since January twenty twenty-five, per Bloomberg Markets, with rising oil prices bolstering expectations that the Federal Reserve will hike. That follows Fed Chair Kevin Warsh's hawkish remarks at Jackson Hole.

Milo: Markets see Warsh endorsing a September rate hike, though not everyone is convinced, and one account says the path toward that move still looks cluttered. George Goncalves of MUFG, on Bloomberg Brief, sees no urgency for the Fed to hike, pointing to upcoming jobs and Consumer Price Index data as the inputs into whether a potential hike happens. He also weighed Treasury yields, market expectations, and the longer-term impact of AI on productivity and inflation.

Mia: So a September hike is far from settled, and the next jobs report and CPI reading are the concrete data that could decide the Fed's path. In currencies, the dollar is set to weaken for a second month on a Treasury buyback, according to Bloomberg. Separately, Bessent pushed back on Druckenmiller's critique of bond intervention.

Milo: Oil moved higher Monday, with Brent crude jumping above ninety dollars a barrel after the latest attacks in the flare-up of U.S.-Iran hostilities. The U.S. struck Iranian targets for the first time in weeks, and President Trump warned, quote, we're going to hit them hard, after Iran targeted U.S. forces in Jordan. Energy participants were watching for renewed supply risks.

Mia: Trump also announced a massive oil deal with Venezuela, but reporting says it won't lower gas prices anytime soon. Paul Sankey of Sankey Research called the Venezuela deal a bit of a sideshow for oil and the diesel price a colossal problem. Examining U.S. plans to control more than sixty-five billion barrels of Venezuelan oil, he said the industry is short of refining, calling that the big issue for the global market. Meanwhile, a major United Arab Emirates oil refinery returned to full capacity after a war hit, and Trump is set to meet with U.S. refiners as the White House pushes to lower gas prices.

Mia: On gold, prices sank Monday following the U.S. strikes on Iran. Silver also opened lower as rate-hike expectations rose.

Mia: For investors who want a tighter view of the trading day, the Investing Club puts out the Homestretch every weekday, an actionable afternoon update timed for the last hour of trading.

Milo: So to pull the day together — equities sold off as the U.S. and Iran traded strikes, the oil spike pressured rate-sensitive stocks, and the earnings and strategist backdrop stayed supportive even as technicians stayed cautious.

Mia: And California's wildfire bill sent Edison International and PG&E tumbling to the bottom of the index.

Milo: Thanks for listening, and we'll see you next time.