Markets Slide on Inflation Fears as Oil Tops $100, Fed Hike Odds Jump to 70%

Market Snapshot

S&P 500 (SPY) — 757.83 (-0.60%) [Twelve Data] · Nasdaq 100 (QQQ) — 708.69 (-1.06%) [Twelve Data] · Dow Jones (DIA) — 520.75 (-0.63%) [Twelve Data] · Gold (GLD) — 396.36 (-1.73%) [Twelve Data] · US Oil (USO) — 158.38 (+5.61%) [Twelve Data] · Bitcoin (BTC) — 77,305 (-1.15%) [Binance US] · Ethereum (ETH) — 2,467.79 (-0.22%) [Binance US]

Stock Markets

U.S. equities extended their pullback as inflation anxieties intensified, with the Nasdaq 100 falling 1.06%, the S&P 500 down 0.60%, and the Dow off 0.63%. According to CNBC, the selloff accelerated after oil prices climbed back above $100 per barrel and Treasury yields hit fresh cycle highs, creating what one analyst described as a "toxic mix" for risk assets.

Crypto Markets

Bitcoin fell 1.15% to $77,305, while Ethereum declined 0.22% to $2,467. Altcoins showed broader weakness, with Solana down 1.60% and XRP off 2.28%. According to CoinDesk, U.S. spot bitcoin ETFs posted a second consecutive day of outflows, losing approximately $120 million on Wednesday. Ark and 21Shares' ARKB accounted for $78 million of the redemptions, with Grayscale's GBTC shedding $27 million and BlackRock's IBIT $20 million. Morgan Stanley's MSBT was the only fund recording inflows at roughly $4 million.

The crypto selloff mirrored broader risk-asset weakness as Treasury yields and oil prices surged to new cycle highs. CoinDesk noted that the European Central Bank hiked rates on Thursday and U.S. core producer price index data came in hotter than expected, though it eased slightly from prior readings. Global bond yields hitting fresh highs pressured digital assets alongside equities.

Regulatory developments offered a mixed backdrop. Coinbase CEO Brian Armstrong told CNBC that $400,000 bitcoin by 2030 is a "reasonable target," citing expectations for greater regulatory clarity under the pending Clarity Act. A crucial preliminary Senate vote on the legislation is scheduled for next week, according to CNBC. Separately, CNBC reported that White House National Economic Council Director Kevin Hassett held between $1 million and $5 million in Coinbase shares at the end of 2025 as the Trump administration rapidly reshaped federal crypto policy. The SEC dismissed with prejudice its enforcement lawsuit against Coinbase just over a month into Trump's term, saying the move facilitated broader regulatory overhaul rather than reflecting an assessment of the case's merits.

Infrastructure partnerships continued despite market weakness. Nasdaq's venture capital arm invested $100 million in Kraken parent Payward to launch tokenized equities in 2027, according to CNBC. Coinbase partnered with financial services provider Moov to expand stablecoin capabilities for community banks ahead of the Clarity Act vote, CNBC reported. Kalshi won CFTC approval to list perpetual futures tied to gold and silver, expanding beyond its cryptocurrency perpetuals launched in May.

Macro & Global Drivers

The Federal Reserve's policy outlook shifted sharply hawkish as inflation pressures intensified. Market-implied odds of a rate hike at next week's FOMC meeting jumped to 70% from roughly 60% the prior day, according to CNBC, following an August Producer Price Index report showing wholesale prices rose 5.4% year-on-year—exceeding expectations and signaling potential upward pressure on downstream consumer prices.

Friday's consumer price index report has taken on outsized importance as the last inflation data the Fed will see before its decision. The Dow Jones consensus expects a 0.4% monthly increase, according to CNBC, which would keep year-over-year inflation elevated. The combination of rising energy costs and persistent price pressures has created what analysts describe as an unfriendly environment for the Fed's inflation-fighting efforts. CNBC reported there's possibly another rate hike before year-end based on current market pricing.

The European Central Bank raised its benchmark rate by 25 basis points to 2.50% on Thursday, according to Reuters and the Associated Press, marking the second hike this year. The ECB cited inflation driven entirely by higher energy costs from the U.S.-Iran war. Reuters noted that persistent inflation pressures and resilient economic growth have increased the risk of further rate hikes by major central banks globally, as Middle East tensions show little sign of easing.

Currency markets reflected the shifting rate landscape. Reuters reported the dollar held near its highest levels of the past week while the yen slipped for a second day in early Asian trading Friday, as renewed fears of energy supply disruptions pushed up bond yields and oil prices. The 10-year U.S. Treasury yield held steady at 4.84%, according to CNBC, while the 30-year bond yield rose on broader geopolitical risk. The combination of higher rates, elevated energy prices, and geopolitical uncertainty has created a challenging backdrop for risk assets across equities, crypto, and precious metals.

Markets Slide on Inflation Fears as Oil Tops $100, Fed Hike Odds Jump to 70%

Market Snapshot

Stock Markets

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