(Updates with index/price moves, macroeconomic data and company/geopolitical news from the first paragraph.)
US equity indexes fell as crude oil and government bond yields surged after an inflation gauge grew at the fastest pace in three months and an Iran-aligned militia group's threats to an alternative shipping route to the Strait of Hormuz mounted.
The Nasdaq Composite declined 0.7% to 26,081.73, the S&P 500 retreated 0.6% to 7,591.70, and the Dow Jones Industrial Average dropped 0.6% to 52,064.10 on Thursday. All sectors except communication services and consumer staples dropped. Materials and utilities led the decliners.
The Bureau of Labor Statistics' wholesale price inflation gauge, the Producer Price Index, jumped 5.4% from a year ago in August, above the 5.3% forecast in a Bloomberg-compiled survey, and 4.8% in July. The PPI edged up 0.4% month over month, as expected, following a 0.1% increase in July. The August print is the highest growth rate since May.
Core PPI, which excludes volatile food and energy prices, climbed 4.6%, as anticipated, from a year ago, and up from 4.3% in July. Core PPI climbed 0.2%, below July's 0.3% and the 0.3% forecast.
"Based on the timing of the PPI survey, we expect another rise in September's report, as diesel prices have climbed nearly 60 cents and gasoline prices have risen close to 20 cents during the survey window, which is in the middle of the month," Grace Zwemmer, US economist at Oxford Economics, said in a note.
US Treasury yields traded sharply higher across the term structure, with the 10-year yield surging 12.3 basis points to 4.96%, the highest since October 2023.
The European Central Bank raised its three key interest rates by 25 basis points on Thursday, as the energy shock caused by the ongoing Middle East war pushed inflation in the euro area above its 2% medium-term target.
Iran-aligned Houthis seized control of Yemen's port city of Mocha on Thursday, military sources said, gaining further leverage over the Bab el-Mandeb Strait, the southern outlet of the Red Sea, according to a report from Reuters. Bab al-Mandeb is a geopolitical chokepoint similar to the Strait of Hormuz linking Asia and Europe via the Suez Canal.
If the Houthis impose a stranglehold over the waterway, on the opposite side of the Arabian Peninsula from the Strait of Hormuz, it could give their sponsor Iran a critical advantage in the war with the United States, reducing supplies through a second major transit corridor, the news report said.
Saudi Arabia reported to the Organization of the Petroleum Exporting Countries that its crude oil production plunged again last month, down by 1.9 million barrels a day to 6.238 million barrels, the lowest since 1990, as renewed hostilities between the US and Iran squeezed the kingdom's export routes, Bloomberg reported.
The front-month US West Texas Intermediate crude oil contract climbed 7.2% to $102.92 per barrel, and global benchmark North Sea Brent rose 6.9% to $108.16 per barrel.
Gold futures dropped 2.2% to $4,363.5, and silver futures sank 6.6% to $64.15.
In US company news, shares of Cooper Companies (COO) sank almost 15%, the worst performer on the S&P 500, after a fiscal Q3 revenue miss overshadowed its earnings beat, and the company also cut its full-year outlook.
Apple (AAPL) rose 3.6%, the Dow's top gainer, as the iPhone manufacturer unveiled its first foldable smartphone on Wednesday.