Oil and yields climb on Middle East uncertainty
The S&P 500 and Nasdaq rebounded from session lows after Reuters reported US and Iranian negotiators were exploring a phased path out of war that would involve Iran reopening the Strait of Hormuz and the US lifting its economic blockade of Iran.
US and Iranian leaders exchanged barbs this week at the United Nations General Assembly.
Brent crude prices rose more than 3.0% to nearly $US107 per barrel after a Houthi missile attack on Saudi Arabia revived fears of supply disruptions.
“This just reinforces the view that we’re dealing with one major market catalyst right now,” said Bill Northey, senior investment director at US Bank Wealth Management.
“It’s really all about oil and inflation and the effect on interest rates, and then the interest rate cascading across the capital markets.”
Rate hike bets build as Trump hosts Xi
US President Donald Trump welcomed Chinese President Xi Jinping to the White House for a summit related to issues including AI, trade, Taiwan and the war in the Middle East.
Data on Wednesday suggesting strong business activity has led to increased expectations the Federal Reserve will raise interest rates again following its quarter-percentage-point hike last week.
Traders are pricing in a nearly 70% chance of a hike next month, according to the CME FedWatch Tool.
New York Fed president John Williams, who has a vote on the Federal Open Market Committee, on Thursday said it was reasonable to think that the US central bank might need to raise interest rates again before the end of the year.
AI heavyweights mixed
AI heavyweights were mixed, with Microsoft dipping 0.5% and Broadcom losing 1.3% while Advanced Micro Devices rose 2.4%.
Meta Platforms climbed 4.5%, a day after the social media company unveiled a small handheld gadget for use with its recently launched AI assistant.
Oracle fell 3.5% after a report said the company sent a “force majeure” notice to a New Mexico data centre.
Shares of Blue Owl, the project’s developer, also fell sharply.
30-year Treasury yield hits highest since 2004
Treasury yields rose, with the 30-year Treasury bond yield reaching its highest since 2004.
Higher yields make safe-haven Treasuries relatively more attractive to investors than stocks with uncertain returns.
