Stan Choe
Oil prices jumped and the price for a barrel of Brent crude got back above $US104, while the US stock market pulled further from its record with technology stocks falling sharply.
The S&P 500 dipped 0.5 per cent and is on track for a second modest loss after setting its all-time high. The Dow Jones Industrial Average was down 131 points, or 0.3 per cent, in afternoon trade, and the Nasdaq composite was 0.9 per cent lower.
The Australian sharemarket is set to edge higher, with futures at 4.59am AEDT pointing to a gain 8 points, or 0.1 per cent, at the open. The ASX shed 0.8 per cent on Thursday. The Australian dollar was trading at US69.57ยข.
Stocks bent under a 3.8 per cent rise for the price of a barrel of Brent, the international standard, to $US104.08. Itโs been swinging between $US96 and nearly $US110 over the last month on uncertainty about when the war with Iran will allow the global energy industry to return to normal.
Nvidia, the chip company thatโs ridden the tidal wave of demand created by the artificial-intelligence technology frenzy, fell 1.1 per cent and was one of Thursdayโs heaviest weights on the S&P 500. Tech and AI-linked stocks fell around midday amid multiple bearish headlines. The Financial Times reported OpenAIโs annualised revenue is $20 billion less than previously signalled. Oracle slid following a report it was trucking natural gas to server farms as a workaround to power bottlenecks.
That was even though a bellwether for the chip industry, Taiwan Semiconductor Manufacturing Co., reported growth for September that suggested its revenue for the latest quarter was strong enough to top analystsโ expectations. TSMCโs stock that trades in the United States fell 2 per cent.
Wall Street also felt pressure from more sharp swings within the bond market.
The yield on the 10-year Treasury veered from 5.28 per cent late on Wednesday to 5.35 per cent early on Thursday morning. It then fell back to 5.26 per cent.
Despite all the back and forth, it remains near its highest level since 2002 and well above its 3.97 per cent level from before the war with Iran began because of worries about high inflation, big government debt loads and other factors.
Also helping to support yields was the latest report to suggest the US economy is continuing to chug along. Fewer US workers applied for unemployment benefits last week, which may mean companies are laying off fewer workers.
Higher yields can slow the economy by making it more expensive for everyone to borrow money. High yields also put downward pressure on prices for stocks and other investments, and those seen as the most expensive often feel the brunt.
That raises the pressure on companies to deliver big growth in profits, which can offset the downward push on their stock prices from higher bond yields. A big reason for the S&P 500โs rally to a record is that analysts expect companies in the index to deliver nearly 30 per cent growth in earnings per share this upcoming reporting season.
Thatโs a high bar.
Levi Strauss on late Wednesday reported a bigger profit for its latest quarter than analysts expected, while raising its forecast for profit over its full fiscal year. But its stock nevertheless fell 3.1 per cent after its growth in revenue fell short of analystsโ expectations.
PepsiCo, in contrast, added 1.3 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected and highlighting strength outside of North America. It, though, cut its forecast for an underlying measure of profit this fiscal year.
Expectations are likely not as high for PepsiCo as for other companies because its stock came into the day with a drop of nearly 14 per cent for the year so far. That compares with gains of nearly 15 per cent for the S&P 500 and 27.3 per cent for Nvidia over the same time, which are both near their records.
In stock markets abroad, South Koreaโs Kospi fell 2.6 per cent for one of the worldโs larger losses. It was hurt by a 2.4 per cent drop for Samsung Electronics, one of its two dominant stocks.
The tech giant said its operating profit for the latest quarter likely soared to $US107.4 trillion Korean won ($110 billion) from $US12.17 trillion won a year earlier, but that wasnโt enough to satisfy investors.
Indexes fell across much of the rest of Asia and Europe.
AP, Bloomberg
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