In the global market selloff at the end of October, crude oil and US Treasuries became among the few assets that strengthened against the tide. On Friday, US Eastern Time, the three major US stock indices fell for a second consecutive trading day, with the Nasdaq dropping nearly 3% and the Philadelphia Semiconductor Index plunging 7.2%. At the same time, international oil prices rose more than 2%, Brent crude futures hit their highest close since April, and US Treasury yields continued to decline.
On Friday, US stocks, gold, Bitcoin and other cryptocurrencies all fell together, while US crude oil and US Treasury prices moved higher. Bloomberg noted that the risk of further escalation of the Iran war and demand for geopolitical hedges supported oil prices. The strength in the crude oil market was no longer limited to price gains; it was also reflected in the futures curve: the premium structure of the front-month Brent crude contract has risen to a historically high range, indicating that competition for near-term supply is intensifying.
US tech stocks suffer heavy losses, Nasdaq posts largest single-day drop in nearly five months
On Friday, the three major US stock indices fell for a second consecutive trading day, with tech stocks bearing the brunt of the selling. The S&P 500 closed down 1.82% at 7,580.07 points, its largest single-day decline since June 5 and a fresh low since September 16. The Dow closed down 572.25 points, or 1.09%, at 51,770.31 points.
The Nasdaq Composite closed down 2.86% at 25,437 points, also its largest single-day decline since June 5 and a fresh low since July 31. For the week, the Nasdaq fell 2%, and for October it dropped 5.3%, its largest monthly decline since March 2025.
Semiconductor stocks suffered even heavier losses. The Philadelphia Semiconductor Index (SOX) closed down 7.2%, its largest single-day decline since June 2025. Intel fell nearly 31.4% at one point during the session and ended down about 28.6%, its largest single-day drop since July 1974.
The tech stock selloff was tied to concerns about corporate earnings and capital expenditure. Intel's fourth-quarter guidance released after the bell on Thursday fell short of market expectations, while Amazon's third-quarter capital expenditure far exceeded market expectations, free cash flow turned sharply negative, and the company maintained its capital expenditure guidance of $220 billion for this year unchanged. Massive AI investment also intensified investor concerns about the scale of tech companies' spending, cash burn and return on investment.
Media noted that the market is re-examining the enormous spending required for the AI infrastructure race and its return prospects.
Oil prices rise against the trend, with US crude up four straight weeks and Brent up six straight weeks
In sharp contrast to the selloff in tech stocks, international crude oil rebounded on Friday, closing up more than 2%. US WTI December crude futures settled up $2.12, or 2.08%, at $104.12 per barrel, a fresh high since September 15. Brent December crude futures settled up $2.76, or 2.40%, at $117.64 per barrel, the highest close since April 29.
Friday's gains helped crude oil continue its weekly winning streak. WTI crude rose 0.82% for the week, its fourth consecutive weekly gain and longest streak since March 23. Brent crude rose 0.79% for the week, its sixth consecutive weekly gain and one of its longest streaks since April 2.
October performance was also strong: WTI crude rose 15.15% for the month, while Brent crude gained 13.63%.
The direct support for oil prices came from renewed tensions in the Middle East. The market is worried that the Iran war could escalate, and risks to shipping through the Strait of Hormuz and Middle Eastern energy facilities have re-entered the trading spotlight. Geopolitical hedging demand thus provided support for oil prices.
Bloomberg noted that the final batch of near-month contracts for 2026 expired on Friday, and the related contract touched $118 per barrel during the session at one point, approaching this year's highest single-day closing price. The strength in oil prices also began to show up in the futures curve.
Brent near-month contract trades at $2 premium to far-month, oil market tighter
More noteworthy than absolute prices is the signal being sent by the crude oil futures curve.
Bloomberg reported that the expiration settlement spread for Brent crude futures has entered a historically elevated backwardation range. After Friday's contract expiry, the six-month moving average of that spread rose to about $2, close to the highest level in at least a decade.
Backwardation means that crude oil for near-term delivery is priced higher than forward contracts. This typically reflects a market that places greater value on immediate supply: buyers are willing to pay a premium for crude that can be delivered soon rather than waiting for future supply to arrive.
The continued widening of the near-month premium shows that market tension is no longer just pushing overall crude prices higher; it is also changing relative pricing across different delivery months.
Bloomberg believes that the persistent abnormality in this spread structure indicates that bullish momentum in crude oil is expanding from absolute prices to the near-month market. As the January 2027 contract becomes the new front-month contract next week, the crude oil market may continue to show characteristics that are out of sync with the current deleveraging trend in the broader macro market.
However, backwardation itself does not necessarily mean that a supply shortage will persist, nor can it alone prove that oil prices will rise further. Geopolitical risks, actual supply changes and subsequent contract rollovers could all affect the spread's direction.
US Treasury yields fall for a second day as safe-haven trades and rising oil prices occur in parallel
As stocks came under selling pressure, US Treasuries also attracted safe-haven flows.
On Friday, the yield on the US 10-year benchmark Treasury note fell below 4.89% at one point during the session, a fresh low since September 10. Yields fell for a second day and posted a fourth consecutive weekly decline, the longest streak since October 2025.
The 2-year Treasury yield, which is more sensitive to the interest rate outlook, briefly fell below 4.56% during European stock trading hours, a fresh low since September 10. Yields fell for a third day and have now declined for a fifth consecutive week, approaching the longest streak since 2020.
Falling yields mean bond prices are rising, reflecting that investors increased allocations to US Treasuries amid stock market turbulence. Unlike oil price gains, which would normally push up inflation expectations and thus put upward pressure on bond yields, Friday's market presented a situation in which crude oil strengthened while US Treasury yields declined.
Bloomberg's core judgment is that against the backdrop of intensifying macro market volatility and investors cutting risk exposure, crude oil is behaving differently from traditional risk assets. At least judging by this week's price action, oil's strength stems not only from geopolitical hedging demand but is also supported by rising near-month contract premiums.
As the January 2027 contract takes over as the front-month contract next week, whether crude oil can continue to decouple from the macro market's deleveraging trend will continue to depend on the Middle East situation, near-term supply risks, and the degree of physical market tightness reflected in the futures curve.
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