NEW YORK (AP) — Oil prices rose Wednesday following thelatest flare-up in fightingto threaten the U.S.-Iranceasefire, and U.S. stocks retreated fromtheir records.
The S&P 500 fell 0.7% from its all-time high for its first drop in 10 days. The Dow Jones Industrial Average dropped 620 points, or 1.2%, and the Nasdaq composite sank 0.9%.
Weighing on the market was a climb of 1.9% for the price of a barrel of Brent crude oil, the international standard, which brought it back to $97.81. It rose after both the United States and Iran said they launchedretaliations for earlier attacks or attempted ones.
Palo Alto Networks helped drag the market lower, and it fell 5.6% even though it reported profit for the latest quarter that topped analysts’ expectations. Investors may have been looking for even more after its stock came into the day with a surge of 61.3% for the year so far, more than quintuple the S&P 500’s already big 11.2% rise.
Stocks also felt pressure from higher yields in the bond market, which climbed with the price of oil. The yield on the 10-year Treasury rose to 4.49% from 4.46% late Tuesday and from just 3.97% before the war began.
High yieldsworldwide are threatening to slow economies and undercut prices for stocks and all kinds of other investments. They have already forced the average long-term U.S. mortgage rate to itsmost expensive level in nine months, and they could curtail companies’ borrowing to build the artificial-intelligence data centers that havesupported the U.S. economy’s growthrecently.
More expensive loans can hurt smaller companies in particular because many need to borrow to grow. The Russell 2000 index of the smallest U.S. stocks fell 1.3%, more than the rest of the market.
Reports released Wednesday on the U.S. economy came in mixed. One from the Institute for Supply Management said growth accelerated more last month for U.S. construction, agricultural and other services businesses than economists expected.
That’s an encouraging signal, but the survey also showed businesses are feeling the pinch of higher prices caused by tariffs and more expensive oil. “This is the definition of inflationary pressure starting to affect us,” one company in the accommodation and food services industry said in the survey.
Still, stocks remain near their records, even with all thepressure on the global economycreated by higherinflation.
Source: Fast Company
