US stocks hover just below records as oil slips on hopes of an Iran deal
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NEW YORK (AP) — The U.S. stock market is hanging just below its records Thursday as oil prices keep dropping on hopes that a deal may be nearing to allow tankers to deliver crude once again from the Persian Gulf to customers.
The price for a barrel of Brent crude oil, the international standard, fell 0.5% to $100.71, down from more than $115 early this week. It and gasoline are still much more expensive than they were before the war with Iran began, but hope is rising in financial markets as Iran said it was reviewing the latest U.S. proposals on ending their war.
On Wall Street, the S&P 500 fell 0.3% from its all-time high set the day before after a spokesperson for Pakistan’s Foreign Ministry said, “We expect an agreement sooner rather than later.” Pakistan has been acting as a mediator between the United States and Iran, and the hope is that they will reopen the Strait of Hormuz. Its closure during the war has kept oil tankers trapped in the Persian Gulf and sent prices higher for crude and all kinds of products.
The Dow Jones Industrial Average was down 285 points, or 0.6%, as of 2:09 p.m. Eastern time, and the Nasdaq composite fell 0.1% from its own record.
Of course, Wall Street has rallied strongly before on hopes for a coming end to the war with Iran, only to get quickly disappointed. That could happen again, and tensions are still high in the Middle East after a U.S. fighter jet shot out the rudder of an Iranian oil tanker in the Gulf of Oman Wednesday as it tried to breach the American blockade of Iran’s ports.
Despite all those uncertainties, a powerful parade of U.S. companies saying they made even bigger profits during the first three months of the year than analysts expected has helped support the U.S. stock market. Stock prices tend to follow the path of corporate profits over the long term.
Datadog leaped 28.2% to help lead the U.S. market after the monitoring and security platform for cloud applications topped analysts’ expectations for profit in the latest quarter.
Albemarle rose 5.7% after the lithium products and specialty chemicals company likewise delivered better-than-expected results. Taser maker Axon Enterprise rallied 10.7% after raising its forecast for revenue this year in part because of big growth for its counter-drone products.
They helped offset a 13.2% drop for Whirlpool, which tumbled after reporting much weaker results than analysts expected. It announced the largest price increases in a decade for its major appliances in North America, while accelerating cuts to its costs, as it contends with weaker confidence among U.S. consumers.
Shake Shack dropped 29% after its results for the latest quarter fell well below analysts’ expectations.
McDonald’s was mostly unchanged even though its revenue for the latest quarter edged past analysts’ expectations. CEO Chris Kempczinski said high gasoline prices and consumer anxiety over the Iran war could dent its sales this spring.
In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury rose to 4.39% from 4.36% late Wednesday, but remains down from 4.45% early this week.
Lower yields can bring down rates for mortgages and other kinds of loans going to U.S. households and businesses, which in turn can give the economy a boost. Lower yields also tend to push upward on prices for stocks and other kinds of investments.
The 10-year Treasury yield, though, remains well above its 3.97% level from just before the war.
Several reports on the U.S. economy also came in mixed. One said more U.S. workers applied for unemployment benefits last week, but the increase was not as bad as economists expected. Another report suggested that productivity for U.S. workers improved by only half of what economists expected for the latest quarter.
In stock markets abroad, indexes fell in Europe following a stronger finish in Asia.
Japan’s Nikkei 225 roared 5.6% higher as trading in Tokyo reopened following a holiday and caught up with big gains for Asian markets from earlier in the week. It’s at a record after soaring nearly 71% in the last 12 months on strength for tech stocks benefiting from the boom in artificial intelligence.
“I think it’s a kind of bubble because buying activity concentrated on leading AI, artificial intelligence stock and semiconductor-related stocks. It’s a situation where only semiconductor stocks are being bought,” said Takashi Hiroki, chief strategist at MONEX.
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