Wall Street’s nine-day winning streak ends as Iran strikes push oil above $96 and Treasury yields higher

New US military strikes on Iranian targets on Wednesday 3 June ended a remarkable nine-session winning run for American equities, replacing the optimism that had propelled the S&P 500 to successive records with a sharper reckoning over oil, bonds and the durability of the artificial-intelligence investment thesis. The broad sell-off saw the Russell 2000 small-cap index decline 1.31%, suggesting the pressure was felt well beyond the technology mega-caps that had led the advance.

According to CNBC, US Central Command confirmed strikes on Iranian military infrastructure, including a ground control station and Iranian attack drones, framing the action as defensive. President Donald Trump insisted negotiations with Tehran remained active, pushing back on Iranian state-media reports that talks had been suspended. Markets, however, priced the escalation rather than the diplomacy.

Oil and bonds tighten the vice

WTI crude rose to around $96 a barrel — its third consecutive session of gains — while Brent approached $98, according to OilPrice.com. Industry data showing a sixth straight weekly drawdown in US crude inventories of 6.8 million barrels added further tightness to a market already strained by disruptions to Persian Gulf supply. The Federal Reserve’s H.15 release showed the 10-year Treasury yield at 4.46%, with the 30-year approaching 4.97% — levels consistent with bond investors pricing in a stickier inflation profile. A Bloomberg report noted Treasuries suffered their steepest two-week fall as traders raised bets on a Federal Reserve rate rise, reflecting the direct pass-through from energy costs to CPI expectations. The CBOE Volatility Index edged up 1.84% to 16.06, a moderate reading but one pointing to renewed unease after weeks of calm.

The energy sector was the session’s lone significant gainer, riding the crude price surge. Technology, financials and consumer discretionary dragged on the broader indices as rising yields compress equity valuations and increase the cost of the leveraged bets that have fuelled the AI trade. Private payroll data showing 122,000 jobs added in May — a solid figure in isolation — was insufficient to offset the geopolitical overhang.

Goldman’s $90 warning and the Hormuz risk premium

Goldman Sachs, in its fourth upward revision to its oil outlook since the Iran conflict began in February, raised its Q4 2026 Brent target to $90 a barrel and WTI to $83 a barrel. Crucially, the bank — whose chief Asia-Pacific economist Andrew Tilton has been among the most closely watched voices on the conflict’s market impact — argued that Brent could average around $90 through year-end even if the Strait of Hormuz reopens, because supply-chain normalisation across the Gulf could take months and the geopolitical risk premium has shifted further out along the forward curve. In adverse scenarios, with sustained production losses near two million barrels per day, Goldman flagged Brent could reach $115 to $120 a barrel.

Wednesday’s session illustrated a tension that has been building for weeks: equity markets have been trading the AI thesis — record chip revenues, data-centre capital expenditure and productivity gains — while oil and bond markets have been pricing the Iran escalation. For much of May those two narratives coexisted, with dip-buyers absorbing each geopolitical jolt. The snap of the nine-day run suggests that coexistence is becoming harder to sustain. If energy costs keep Treasury yields elevated and revive inflation, the Federal Reserve’s path back to easing narrows, and the high-multiple technology stocks that have carried the indices become progressively more exposed. Investors will watch Friday’s official US jobs data and next week’s CPI print for early signals on whether the oil shock is feeding through to the broader price level.