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Financial Markets 07/09 09:24
NEW YORK (AP) -- Wall Street and oil prices are holding steadier Thursday
following their sharp swings the day before in the wait to see what will come
next after President Donald Trump raised doubts about the temporary truce in
the war with Iran.
The S&P 500 rose 0.3%, even though the United States launched new airstrikes
against Iran, which responded by targeting U.S. allies in the Middle East. The
Dow Jones Industrial Average was down 47 points, or 0.1%, as of 9:35 a.m.
Eastern time, and the Nasdaq composite was 0.5% higher.
In the oil market, prices edged lower following their spurts higher from the
day before. The price for a barrel of Brent crude, the international standard,
slipped 0.1% to $77.94. That's down from $78.02 the day before but still above
its $71.80 price at the end of last week.
The worry is that a return to full-blown war will block oil tankers from 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 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.
But Trump also said Wednesday that the latest back-and-forth fighting would
not result in "long-term" military action, raising uncertainty about just what
will happen.
The swings for oil prices have halted what had been a steady decline in
gasoline prices, and the cost for a gallon climbed a nickel overnight,
according to motor club AAA. The average price for a gallon of regular gasoline
was $3.85 Thursday, up 69 cents from a year earlier.
In the meantime, some renewed strength for computer chip companies and other
winners of the boom around artificial-intelligence technology are helping to
support stock markets worldwide.
In South Korea, whose stock market is dominated by two companies that make
semiconductors, the Kospi index rose 0.6% after tumbling 5.3% the day before.
SK Hynix, which is preparing to sell shares of stock that will trade in the
United States, jumped 5.3% in Seoul.
On Wall Street, Micron Technology's rise of 7.2% was the strongest force
pushing upward on the S&P 500. Close behind ws the 3.5% rise for Broadcom.
Such stocks have become some of Wall Street's most influential after growing
so big in the euphoria around AI. But AI stocks have also come pressure
recently 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
centers worth it.
They and other stocks also got some help from stabilizing yields in the bond
market. The yield on the 10-year Treasury held at 4.56%, where it was the day
before.
It had been climbing on worries about high oil prices and the potential for
higher interest rates, cranking up the pressure on stocks and prices for other
investments.
Besides the war with Iran, another big event for Wall Street is the upcoming
start of the latest earnings reporting season. Next week, the biggest banks are
set to unveil how much profit they made from April through June. Companies
broadly will need to report strong growth to justify the big moves their stock
prices have made.
PepsiCo fell 4.8% even though it reported slightly better revenue for the
latest quarter than analysts expected. Numbers released by the company behind
Gatorade and Doritos showed weakening trends in its North American food and
drinks businesses.
In stock markets abroad, indexes rose across much of Europe and Asia.
Besides Seoul's climb, stock indexes rose 1.7% in Shanghai and 0.7% in Paris.
On the losing end was Hong Kong's Hang Seng, which slipped 0.7% as shares of
Apple supplier Luxshare fell 1.5% in its trading debut.
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AP Business Writers Chan Ho-him and Matt Ott contributed to this report.
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