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Financial Markets 08/10 15:38
NEW YORK (AP) -- The U.S. stock market edged down from its all-time high on
Monday, while oil prices rose on uncertainty about when the Strait of Hormuz
could reopen and get the global flow of crude going again.
The S&P 500 slipped 0.1% from its record set on Friday. The Dow Jones
Industrial Average dipped 60 points, or 0.1%, and the Nasdaq composite fell
0.3%.
Momentum slowed for stocks following a rally powered by soaring profits for
big U.S. companies. Reports are on track to show earnings per share leaped 50%
in the spring from a year earlier for companies in the S&P 500, according to
FactSet. That would be the best growth since five years ago, when the economy
was roaring out of the chasm created by COVID.
Berkshire Hathaway is one of the latest companies to deliver a stronger
profit for the last quarter than analysts expected, and the company built by
legendary investor Warren Buffett said over the weekend that it's also invested
some of its massive pile of cash into stocks under its new CEO, Greg Abel.
Berkshire Hathaway has been famous for buying stocks at what it considers
low prices, and criticism has been high that U.S. stocks generally look too
expensive. But when they report strong profits, it helps them look less pricey.
Berkshire Hathaway's stock rose 1.5%.
MarineMax jumped 46.1% after the retailer, marina operator and superyacht
services provider said it agreed to sell itself for about $1.5 billion in cash
to a portfolio company of Blackstone.
Varex Imaging leaped 48.8% after Teledyne Technologies said it would buy the
maker of X-ray imaging components for $18.90 per share in cash.
But Intel helped offset such gains and fell 4.1% after saying it may sell
$15 billion of its stock. Such a move would dilute the ownership stakes of
shareholders, and Intel said it would likely use the cash for investments to
take advantage of the huge spending underway on artificial-intelligence
technology.
All told, the S&P 500 slipped 4.53 points to 7,753.11. The Dow Jones
Industrial Average dipped 60.95 to 53,975.98, and the Nasdaq composite sank
85.26 to 26,605.36.
In the oil market, the price for a barrel of Brent crude rose 5% to $87.72.
It had swung between $72 and $102 last month as hopes rose and fell that the
United States and Iran could reach an agreement that would allow oil tankers to
freely exit the Middle East again to deliver crude worldwide.
But hopes are turning toward caution again, and the price of Brent is back
to where it was earlier this month, as well as in mid-July, mid-June and in the
first week of the war in March.
Higher oil prices push inflation upward, and the main event for Wall Street
this week will likely be Wednesday's update on how bad inflation was last
month. Economists expect it to show inflation slowed to 3.4% from 3.5% in June.
A slowdown would mean less pressure on the Federal Reserve to raise interest
rates.
Higher rates would help keep a lid on inflation, but they would also slow
the economy by making it more expensive for U.S. households and companies to
borrow money. They would also undercut prices for stocks and other investments.
A report on Friday showing unexpectedly weak hiring across the United States
lowered Wall Street's expectations for an upcoming hike to interest rates. But
traders still see a nearly 52% chance the Fed will raise its main interest rate
at its next meeting in September, according to data from CME Group.
The yield on the 10-year Treasury rose to 4.70% from 4.65% late Friday.
That's up from 3.97% before the war with Iran, and the climb has already sent
rates for mortgages and other kinds of loans significantly higher.
In stock markets abroad, indexes were mixed in Europe after rising in much
of Asia. Japan's Nikkei 225 jumped 2.1% for one of the world's bigger moves.
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AP Business Writers Michelle Chapman and Elaine Kurtenbach contributed to
this report.
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