Oil jumps on ceasefire doubts
Oil prices rose, and stock markets dropped in shaky trading worldwide on Wednesday after US President Donald Trump raised doubts about the temporary truce in the war with Iran.
The S&P 500 fell as much as 1.1% after Trump said the ceasefire agreement was "over," but the index then trimmed its loss to 0.3% after Trump said recent fighting did not mean a return to full-scale war. They're his latest mixed messages on what will happen with the war, which threatens to worsen inflation for the world.
The Dow Jones Industrial Average dropped 576 points, or 1.1%, while the Nasdaq composite rose 0.2% after erasing an early loss.
The action was stronger in the oil market, where the price for a barrel of Brent crude climbed 5.2% to $US78.02 and briefly topped $US80.
That's still below its peak from earlier in the war, when the price for the most actively traded contract reached nearly $US120. But the jump is unsettling because oil prices had just dropped back to where they were before the war.
The worry is that a continuation of the war will block the Strait of Hormuz and prevent the delivery of crude from the Persian Gulf to customers worldwide. That could worsen inflation, which economists expected would ease with oil prices, and in turn force the US Federal Reserve and other central banks to raise interest rates.
Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.
Housing and travel stocks fall
On Wall Street, stocks of companies in the housing industry helped lead the way lower. They were hurt by worries that rising Treasury yields in the bond market will mean higher rates for mortgages and chill the industry. Companies with big fuel bills also sank.
Helping to offset those losses was a steadying for some influential stocks in the artificial-intelligence industry. They've been under pressure in recent weeks on worries that their prices shot too high and that AI may not produce enough productivity and profits to make all the investments in chips and data centres worth it.
Their swings carry a lot of weight on Wall Street because AI stocks have grown into some of the US market's biggest, giving their movements more effect on the S&P 500 than other stocks.
Nvidia rose 3.7%, for example, and was the strongest force pushing upward on the S&P 500 because it's the largest stock on Wall Street.
All told, the S&P 500 fell 21.14 points to 7,482.71. The Dow Jones Industrial Average dropped 576.76 to 52,348.39, and the Nasdaq composite rose 51.96 to 25,870.65.
