Oil prices are rising Monday as the war with Iran threatens to drag on, but the U.S. stock market is nevertheless hanging near its record heights.
The price for a barrel of Brent crude oil climbed 2.9 per cent to settle at $104.21 after President Donald Trump said the U.S.-Iran ceasefire was on “life support” after he rejected Iran’s latest proposal to end their war. The rejection raises the stakes for Trump’s trip this week to China, where he could urge President Xi Jinping to pressure Iran into making concessions. Xi has leverage because China is the biggest buyer of Iran’s sanctioned crude oil.
The war has already sent the price for a barrel of Brent up from roughly $70 and delivered a blast of painful inflation through the global economy. That’s because it has shut the Strait of Hormuz and kept oil tankers stuck in the Persian Gulf instead of delivering crude to customers worldwide.
Still, the U.S. stock market has been setting records recently on hopes that the war will not keep oil prices high for very long. Companies are meanwhile producing even bigger profits than analysts expected, while signals suggest the U.S. economy is holding up even though households are feeling discouraged by expensive gasoline and tariffs.
On Wall Street, the S&P 500 added 0.1 per cent to its record set Friday. The Dow Jones Industrial Average was up 14 points, or less than 0.1 per cent, with an hour remaining in trading, and the Nasdaq composite was virtually unchanged from its own all-time high.
Mosaic helped drag on the market after the fertilizer company reported much weaker results for the latest quarter than analysts expected. The company is benefiting from higher prices for its products, but it’s also contending with much higher prices for sulfur and other raw materials because of logistics snarls created by the war with Iran.
Mosaic’s stock fell 1.7 per cent.
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Stocks of companies whose customers have the least cushion to absorb higher gasoline prices struggled, and Dollar General fell 7.3 per cent. Businesses with big fuel bills likewise had some of the market’s sharpest losses, including drops of 3.9 per cent for Carnival and 3.2 per cent for Southwest Airlines. More stocks within the S&P 500 sank than rose.
Helping to offset that was Fox, which climbed 6.8 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected.
More than four out of every five companies in the S&P 500 index that have reported their results for the latest quarter so far have topped profit expectations, and they’re on track to deliver overall growth of nearly 28 per cent, according to FactSet. If that turns out to be the case, it would be the best growth since the end of 2021.
It’s not just U.S. companies muscling through analysts’ profit expectations. Globally, companies are on track for their strongest growth in more than four years, according to Deutsche Bank strategists led by Binky Chadha. The boom in artificial-intelligence technology has helped corporate profits rise at a faster rate than overall economies.
Outside of earnings reports, Beazer Homes USA soared 35.4 per cent after Dream Finders Homes offered to buy it in a deal valued at roughly $704 million. A combination would create the country’s seventh-largest homebuilder, and Dream Finders is asking Beazer’s shareholders to push its management and board to OK the deal after making several attempts itself.
Dream Finders rose 3.5 per cent.
Tech stocks were also strong, continuing their big run amid the AI boom. Gains of 2.3 per cent for Nvidia and eight per cent for Micron Technology were the two strongest forces pushing upward on the S&P 500.
In stock markets abroad, indexes were mixed across Europe and Asia. France’s CAC 40 fell 0.7 per cent for one of the world’s bigger losses, while South Korea’s Kospi soared 4.3 per cent thanks to gains for Samsung Electronics, SK Hynix and other tech stocks benefiting from AI.
In the bond market, Treasury yields ticked higher. The 10-year yield rose to 4.40 per cent from 4.38 per cent late Friday.
Yields had moderated a bit this month, but they remain well above where they were before the war began. Higher yields can raise rates for mortgages and other kinds of loans going to U.S. households and businesses, which in turn can slow the economy. Higher yields also tend to push downward on prices for stocks and other kinds of investments.
A report on Monday said the pace of sales for previously occupied U.S. homes was weaker last month than economists expected.
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