NEW YORK — Oil prices are sinking again Tuesday and pulled back below US$80 per barrel for the first time since early March, while the U.S. stock market drifts near its all-time high.
The S&P 500 slipped 0.2 per cent following a rally that’s brought it back within one per cent of its record set earlier this month. The Dow Jones Industrial Average was up 502 points, or one per cent, as of 12:46 p.m. Eastern time, and the Nasdaq composite was 0.5 per cent lower.
With optimism continuing that a tentative U.S.-Iran deal on their war will reopen the Strait of Hormuz at the end of the week and get the global flow of oil going again, the price for a barrel of Brent crude fell 5.4 per cent to $78.66.
Significant hurdles remain in the negotiations, including what to do with Iran’s nuclear program. But the hope on Wall Street is that this agreement will mean a long-term fix to a conflict that has worsened inflation around the world. The price of Brent has come down sharply from its $100-plus level of a few weeks ago, though it could still take months for the energy industry to get back to full speed.
On Wall Street, stocks benefiting from the boom in artificial-intelligence technology were weighing on the market following their vicious swings over the last couple weeks. They have been leading the market up and down amid worries that their stock prices shot too high, too quickly in the mania around AI. That’s taken a toll because chip companies and other AI winners have grown so big that they’ve become some of Wall Street’s most influential stocks.
Drops of 1.7% for Nvidia and 3.5% for Micron Technology were the two heaviest weights pulling the S&P 500 lower.
Robinhood Markets fell 1.6% after the investing platform said in a regulatory filing that it’s laying off about 10% of its full-time employees, while Dave & Buster’s Entertainment sank 5% after reporting a weaker profit for the latest quarter than analysts expected.
On the winning side of Wall Street was SpaceX, which rose 12.8% toward a third straight gain since its debut on the U.S. stock market. It said it’s moving forward with a purchase of Cursor, a popular AI coding assistant, valuing it at $60 billion.
Yum Brands climbed 2.2% after it said it’s selling the Pizza Hut chain for $2.7 billion. Most of the restaurants will go to LongRange Capital, a private equity firm. Those in mainland China will go to Yum China Holdings.
In stock markets abroad, indexes rose in Europe following a mixed performance in Asia.
Tokyo’s Nikkei 225 briefly topped 70,000 for the first time before ending with a modest gain of 0.1% after the Bank of Japan raised its benchmark interest rate to 1%. That’s its highest level in three decades, and it followed a similar move by the European Central Bank last week.
The U.S. Federal Reserve is beginning its own meeting on what to do with interest rates Tuesday, with an announcement on the decision coming Wednesday.
It will be the first meeting under the Fed’s new chair, Kevin Warsh, who was nominated by U.S. President Donald Trump. Trump has been pushing for lower interest rates, which would give the economy a boost but also threaten to worsen inflation. The widespread expectation, though, is that the Fed will leave its main interest rate alone again.
In the bond market, the yield on the 10-year Treasury fell to 4.43% from 4.47% late Monday and from 4.56% earlier this month.
High yields in bond markets worldwide caused by expensive oil prices have threatened to slow economies and undercut prices for all kinds of investments, including stocks and cryptocurrencies. High yields have already sent mortgage rates higher, and a report on Tuesday said construction crews broke ground on far fewer new U.S. homes in May than economists expected.
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AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.
By Stan Choe