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Oil Prices Climb, Wall Street Lower 09/10 09:34
Oil prices keep climbing as the war with Iran keeps clogging the global flow
of crude, and they got back to where they were before the summer on Thursday.
That's worsening worries about inflation and cranking up pressure within the
bond market, helping to send stocks lower again on Wall Street.
NEW YORK (AP) -- Oil prices keep climbing as the war with Iran keeps
clogging the global flow of crude, and they got back to where they were before
the summer on Thursday. That's worsening worries about inflation and cranking
up pressure within the bond market, helping to send stocks lower again on Wall
Street.
The S&P 500 fell 0.6% and is on track for a fourth straight loss, though
it's not far from its all-time high set last month. The Dow Jones Industrial
Average was down 296 points, or 0.6%, as of 10:15 a.m. Eastern time, and the
Nasdaq composite was 0.8% lower.
Stocks sank under the weight of rising oil prices. Brent crude, the
international standard, climbed another 3.5% and at one point got above $105
per barrel for the first time since May.
The price for a barrel of benchmark U.S. crude rose 3.7% and briefly topped
the $100 level for the first time since before Memorial Day.
Oil prices have been jumping since early July, when Brent crude was going
for less than $72 per barrel, as hopes fade that the United States and Iran may
reach a deal soon to fully reopen the Strait of Hormuz and allow oil tankers to
freely exit the Persian Gulf. President Donald Trump said on Wednesday that oil
prices likely won't come down until after the U.S. midterm elections in
November.
The jump has pushed the price for a gallon of regular gasoline to an average
of nearly $4.28 across the United States, according to AAA. That's up nearly
34% from a year earlier and is not only costing people more at the pump but
also through higher prices for all kinds of products that move by truck to
store shelves.
A report on Thursday showed that inflation at the U.S. wholesale level
accelerated to 5.4% last month from 4.8% in July. Retailers could eventually
pass such increases in prices onto shoppers. A report is coming on Friday that
will show how much inflation U.S. consumers are feeling.
The typical move to rein in high inflation is for the Federal Reserve to
raise its main interest rate, the federal funds rate. Such a move then filters
out through the rest of the bond market, makes it more expensive for U.S.
households and businesses to borrow money, slows the overall economy and
undercuts prices for investments to hopefully remove some of inflation's fuel.
A report on Thursday suggested the U.S. job market may still remain solid,
as fewer workers applied for unemployment benefits last week. That could give
the Fed more confidence in the economy's ability to withstand higher interest
rates.
Following Thursday's reports, traders are betting on a roughly 70% chance
the Fed will raise the federal funds rate at its meeting next week. That's up
from the 61% probability seen the day before, according to data from CME Group.
That's also despite Trump's consistent lobbying for interest rates to go lower
rather than higher.
The Fed's counterpart in Europe, the European Central Bank, raised its own
interest rates on Thursday in hopes of getting inflation in check. It cited
"the conflict in the Middle East" and how it "continues to generate inflation
pressures."
It all pushed the yield on the 10-year Treasury up to 4.91% from 4.83% late
Wednesday, which is a significant move for the bond market. It's up from just
3.97% before the war with Iran began, and it's back to where it was in the
autumn of 2023. That was after the Fed cranked the federal funds rate higher to
get super-high inflation coming out of the COVID pandemic under better control.
Higher yields mean investors can make more money from parking their money in
bonds, which in turn can make investors less willing to pay high prices for
stocks and other investments that carry more risk than bonds.
Macy's fell 2.7% even though the retailer reported stronger profit and
revenue for the latest quarter than analysts expected. It also raised its
forecasts for earnings and other financial measures for its fiscal year, but it
warned that "there are macroeconomic and geopolitical factors that could
influence" how much its customers feel comfortable spending.
Macy's said it received $116 million in tariff refunds from the government
-- $98 million during the quarter and another $18 million after the quarter
ended. Macy's CEO Tony Spring told The Associated Press Thursday that it's
using some of the proceeds to lower prices on certain items like furniture and
other big-ticket purchases.
Cooper Cos., which sells contact lenses and fertility products, dropped
14.2% after reporting weaker revenue for the latest quarter than analysts
expected.
In stock markets abroad, indexes slipped across much of Europe and Asia.
Hong Kong's Hang Seng dropped 1.3% for one of the world's biggest moves.
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