Global stocks and bonds fell sharply on Day 27 of the ongoing conflict between the United States and Iran, as mixed signals on ceasefire negotiations and growing uncertainty over Tehran's willingness to engage in talks drove oil prices higher and rekindled inflation fears.

S&P 500 futures dropped 0.9% to session lows as of 8:00 a.m. ET, while Nasdaq futures slumped more than 1%. The sell-off accelerated after Axios reported that the Pentagon is developing military options for a 'final blow' against Iran that could include ground troops and a massive bombing campaign. The report came approximately 48 hours before a U.S.-imposed delay on strikes targeting Iranian energy infrastructure was set to expire.

President Donald Trump urged Iran to 'get serious' about negotiations 'before it is too late,' while the White House maintained that peace talks remain ongoing. Tehran publicly rejected U.S. overtures and issued fresh conditions for ending the conflict, including sovereign control over the Strait of Hormuz and the introduction of tolls for safe passage through the strategic waterway.

Brent crude resumed its advance, rising 3.8% to above $106 per barrel, putting oil on track for its largest monthly gain in more than three decades. The Trump administration is separately examining potential consequences if prices spike to $200 per barrel, according to the source report.

The surge in oil prices pushed Treasury yields higher as money markets priced in tighter monetary policy. Two-year Treasury yields rose four basis points to 3.93%, while the 10-year yield climbed back to 4.39%, producing a bear-flattening of the yield curve. The U.S. dollar also strengthened. Gold slipped below $4,450 per ounce.

All major sectors were lower in premarket trading with the exception of energy. The Magnificent 7 technology stocks posted broad declines: Alphabet fell 1%, Amazon dropped 1%, Apple slid 0.2%, Nvidia declined 1.2%, Meta lost 1.3%, Microsoft fell 0.4%, and Tesla dropped 1%.

Memory-chip stocks came under additional pressure following a report that Google researchers unveiled TurboQuant, a new compression technique that could reduce the amount of memory needed for AI workloads. Micron fell 2% while Sandisk declined 3%.

BlackRock President Rob Kapito warned that investors may be underestimating risks stemming from the conflict. 'What if this disruption is a week, six months, a year — what is it going to mean for the companies that I own?' Kapito said. 'My biggest concern is that people aren't looking at this — they're just making the assumption' for an optimistic outcome.

Wolf von Rotberg, strategist at Bank J Safra Sarasin, noted that markets could rebound quickly under the right conditions. 'If Iran were to signal willingness to negotiate and an end to the closure of the Strait of Hormuz became more likely, equity markets may quickly move back to previous highs,' he said. 'Yet Iran has so far declined all offers to talk as time is on their side.'

In corporate news, Equitable Holdings and Corebridge Financial announced plans to merge in an all-stock deal valuing the combined business at $22 billion. Blackstone is reported to be close to acquiring Rowan Digital Infrastructure in a deal that may value the U.S. data center developer at more than $10 billion. Olaplex rose more than 50% after Henkel agreed to acquire the hair-care brand for $1.4 billion.

Private credit markets also drew scrutiny after Jefferies posted results that missed Wall Street estimates due to losses on credit positions, and an Ares private credit fund recorded its steepest monthly loss on record. Former Goldman Sachs CEO Lloyd Blankfein warned of 'fire' risk in private markets, though executives from Apollo, Blackstone, and Blue Owl stated they see no evidence of rising systemic risks or defaults.

JPMorgan anticipates approximately $65 billion in equity buying and bond selling due to month-end rebalancing, while Goldman Sachs projects a more modest $13 billion.

Source: ZeroHedge, https://www.zerohedge.com/markets/stocks-bonds-slide-ceasfire-hopes-fade