Oil Shock Reshapes Stocks-Bonds Correlation on Wall Street

Escalating tensions from the Iran war are forcing a rethink of traditional cross-asset relationships. Oil is increasingly setting the tone for broader markets, with rising energy costs feeding directly into investor anxiety around equity valuations.

This shift matters for US stocks because higher energy prices historically pressure margins and consumer spending, complicating the picture for sectors already navigating uncertainty around Federal Reserve policy and AI-driven capital expenditure.

Meanwhile, Bank of America's warning that third-quarter investment banking fees could drop over 10% adds another layer of caution, suggesting Wall Street deal activity may be cooling just as macro risks intensify.