NEW YORK — A cooldown in oil prices is clashing on Wall Street with pressure building from the bond market, and the U.S. stock market is making few big moves on Friday.
The S&P 500 added 0.3 per cent after flipping between modest gains and losses earlier in the day. It’s coming off a three-day losing streak marred by big swings caused by rising bond yields, but it nevertheless remains near its all-time high set last month and is on track to finish its first winning week in the last three.
The Dow Jones Industrial Average was up 221 points, or 0.4 per cent, as of 11:30 a.m. Eastern time, and the Nasdaq composite was 0.3 per cent higher.
Stock indexes initially rose after trading began, aided by a drop in oil prices. The most actively traded contract in the market for Brent crude, the international standard, eased 0.6 per cent to US$99.60 per barrel.
It’s been yo-yoing on uncertainty about when the war with Iran will allow oil to flow freely again from the Middle East. Prices go down when hopes rise for a possible deal to fully reopen the Strait of Hormuz to oil tankers, and they go up when doubts resurface.
But a report on U.S. consumer sentiment released shortly after trading began undercut that support because it helped push Treasury yields higher. The report from the University of Michigan said U.S. consumers are bracing for inflation of 4.6 per cent in the coming year, up from their forecast of four per cent the month before. It also said that overall sentiment among consumers was not as bad as economists expected, even if it was the lowest in four months.
The expectations for high inflation are potentially dangerous for the economy because they could encourage behavior that leads to a vicious cycle that makes the cost of living spiral even higher. Indeed, some consumers told the survey that buying some kinds of products now would help them avoid higher prices in the future. If they rush to make such purchases, it could encourage sellers to raise prices further.
Following the report on consumer sentiment, the yield on the 10-year Treasury rose to 5.20 per cent from 5.18 per cent late Thursday and is near its highest level since 2007.
High yields slow the economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments. Rising yields worldwide are rattling all kinds of financial markets, and yields are climbing not only because of worries about high inflation but also because of big government debt loads, signs of continued economic strength and other factors.
The 10-year Treasury yield was at just 3.97 per cent before the beginning of the war with Iran.
High yields hit stocks seen as the most expensive in particular. That has pressured stocks in the artificial-intelligence industry that soared in earlier years because of the frenzy around the technology.
After the 10-year Treasury yield rose, Nvidia reversed an early gain and dipped 0.1 per cent. A day earlier, its fall of 0.9 per cent was the single heaviest weight on the S&P 500.
On the winning side of Wall Street, Akamai Technologies rose seven per cent after the cloud company announced an $11.6 billion, multiyear agreement with Anthropic, the company behind the Claude AI chatbot.
Costco Wholesale added 2.4 per cent after the retailer reported a stronger profit for the latest quarter than analysts expected. Such strong profit reports from U.S. companies have helped the stock market remain resilient despite all the worries about high inflation and oil prices.
In stock markets abroad, indexes were mixed in Europe following bigger moves in Asia. Japan’s Nikkei 225 climbed 1.3 per cent, while Hong Kong’s Hang Seng dropped one per cent.
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AP Business Writers Chan Ho-him and Michelle Chapman contributed to this report.
By Stan Choe