Stan Choe
Hour-to-hour swings for oil prices keep jerking financial markets around, and US stocks are drifting following the latest reversal.
The S&P 500 rose 0.2 per cent and inched closer to its all-time high set last week. The Dow Jones was up 351 points, or 0.7 per cent, and the Nasdaq composite was 0.2 per cent higher. The Australian sharemarket is set to advance, with futures at 4.59am AEST pointing to a rise of 20 points, or 0.2 per cent, at the open. The ASX surged by 1.5 per cent on Thursday. The Australian dollar was trading at US71.49ยข.
All three indexes erased early drops and gained strength following the latest U-turn for oil prices. Brent crude oil briefly got above $US109 per barrel in the morning, threatening to worsen the worldโs already high inflation, before quickly erasing all its gains in midday trading and falling 2 per cent to $US102.93.
Oil prices have been yo-yoing because of uncertainty about how long the war with Iran will keep the Strait of Hormuz shut. The closure has prevented oil tankers from exiting the Persian Gulf to deliver crude to customers worldwide, driving up oilโs price.
As oil prices eased on Thursday, so did pressure on Wall Street thatโs been building from the bond market.
Yields had climbed so high that theyโre threatening to slow economies worldwide and undercut prices for stocks, bitcoin and all kinds of other investments. Theyโve already forced the average long-term US mortgage rate to its most expensive level since last summer, and they could curtail companiesโ borrowing to build the AI data centres that have been supporting the US economyโs growth recently.
The yield on the 10-year Treasury briefly got near 4.63 per cent in the morning before falling back to 4.55 per cent following the midday turnaround for oil prices. Thatโs down from 4.57 per cent late Wednesday and from 4.67 per cent the day before.
Some of the biggest beneficiaries of lower yields can be the smallest companies, many of which need to borrow money to grow. The Russell 2000 index of the smallest US stocks rallied 1.2 per cent, far more than the rest of the market.
Stocks of companies with big fuel bills also rose because of the easing of oil prices. Southwest Airlines climbed 2.8 per cent, and American Airlines flew 3.6 per cent higher.
Ralph Lauren jumped 15 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected.
They helped offset a 1.5 per cent drop for Nvidia, which is one of Wall Streetโs most influential stocks because of its immense size.
The chip company reported stronger profit and revenue for the latest quarter than analysts expected, while also forecasting revenue for the current quarter that cleared analystsโ estimates. โThe buildout of AI factories โ the largest infrastructure expansion in human history โ is accelerating at extraordinary speed,โ CEO Jensen Huang said.
But such performances and such talk have become routine, and Nvidiaโs stock swivelled between losses and gains before falling.
Some analysts said the weakness may have been because investors were locking in profits after Nvidiaโs stock had soared nearly 70 per cent over the prior year, more than double the S&P 500โs 27 per cent jump. The broad AI industry is also getting criticism for becoming too expensive, as well as too circular as Nvidia has bought ownership stakes in companies that use its own chips that drive Nvidiaโs revenue.
Walmart also fell, 6.8 per cent, following its profit report. The retailer delivered another quarter of impressive revenue but offered up weaker forecasts for upcoming profit than analysts expected.
Walmart has resonated with Americans who have grown increasingly cautious about where they spend their money with inflation taking a bigger bite out of paychecks, and discouraged about the economy.
A preliminary report on US business activity suggested that companies are also feeling the bite of higher inflation.
A flash survey from S&P Global said growth in activity for US services businesses unexpectedly slowed a tad, though growth was better than forecast for U.S manufacturers.
โThe damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys,โ according to Chris Williamson, chief business economist at S&P Global Market Intelligence.
A separate report, meanwhile, gave the latest signal that the US job market remains in better shape than economists expected. The number of US workers applying for unemployment benefits last week unexpectedly declined in an indication of fewer layoffs.
In stock markets abroad, indexes were mixed in Europe following bigger moves in Asia.
South Koreaโs Kospi Kospi soared 8.4 per cent thanks to strength for technology stocks. Samsung Electronics jumped 8.5 per cent after its labor union and management reached an agreement late Wednesday that averted a strike. SK Hynix, a chip company partnering with Nvidia, surged 11.2 per cent.
Tokyoโs Nikkei 225 jumped 3.1 per cent, while indexes fell 1 per cent in Hong Kong and 2 per cent in Shanghai.
AP
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