| |
Financial Markets 08/03 16:08
NEW YORK (AP) -- The U.S. stock market rallied to the edge of its all-time
high on Monday after easing oil prices helped calm Wall Street's worries that
inflation could get even worse.
The S&P 500 jumped 1.5% and is just 0.1% below its record set earlier this
summer. It was coming off a frenetic July, where it swung up and down as oil
prices shot higher because of the war with Iran, before ultimately ending the
month just about where it started.
The Dow Jones Industrial Average, which measures a narrower slice of the
U.S. stock market, climbed 693 points, or 1.3%, to an all-time high, while the
Nasdaq composite leaped 2.1%.
Stocks got a lift as the price for a barrel of Brent crude sank 4.7% to
$83.77. It dropped after President Donald Trump said over the weekend that he
decided to hold off on new strikes against Iran at the urging of allies in the
region.
Brent's price careened between $72 and $102 last month as worries rose and
fell about when the war with Iran would allow oil tankers to freely exit the
Persian Gulf again to deliver crude to customers worldwide. The latest
acquiescence by Trump helped to ease worries about the global flow of crude,
and Treasury yields correspondingly fell in the bond market.
The yield on the 10-year Treasury sank to 4.68% from 4.75% late Friday. It,
though, remains well above its 3.97% level from before the war with Iran.
Higher yields threaten to undercut prices for stocks and other investments,
while slowing the economy by making borrowing more expensive for U.S.
households and businesses. The average long-term U.S. mortgage rate has already
leaped to its highest level in a year.
Monday's ease in oil prices helped airlines and other companies with big
fuel bills lead the market. United Airlines flew 5.8% higher, while American
Airlines climbed 5%. Norwegian Cruise Line Holdings steamed 6.6% higher.
Boeing jumped 8% after U.S. regulators certified its 737 MAX-7 planes,
clearing them for commercial service.
Tyson Foods rose 2.8% after the meat company reported a slightly stronger
profit for the spring than analysts expected. CEO Donnie King said strength is
continuing in the company's chicken business and its prepared foods, which
include brands like Jimmy Dean and Hillshire Farm.
It joined a lengthening list of big U.S. companies to deliver a bigger
profit for the spring than analysts expected. That's imperative for Wall Street
because stock prices tend to follow the path of corporate earnings over the
long term, and worries were rising that U.S. stock prices may have broadly
already shot too high.
Companies in the S&P 500 are on track to deliver earnings per share for the
spring that are 47% higher than a year before, according to FactSet, with more
than half of the companies in the index having already reported. If that ends
up being the case, it would be the strongest growth since the spring of 2021,
when the economy was roaring out of the COVID pandemic.
Also offering encouragement for profits was a report on Monday showing that
growth for U.S. manufacturing accelerated to its strongest level since 2022.
Keeping Wall Street unsettled, though, were swings for stocks of companies
that make computer chips. They've been veering up and down for weeks on worries
about whether their surging revenues because of the artificial-intelligence
boom are sustainable.
If AI ends up producing less profit and productivity than hoped, Big Tech
companies could curtail their spending sprees on data centers that have helped
chip stocks soar to tremendous heights.
Micron Technology went from a drop of 6.4% to a gain of 1.7% through the day
before ending with a gain of 0.8%, for example. It's up roughly 190% for the
year so far.
All told, the S&P 500 rose 110.78 points to 7,600.50 and finished just shy
of its all-time closing high of 7,609.78. The Dow Jones Industrial Average
climbed 693.38 to 53,178.41, and the Nasdaq composite rallied 540.04 to
25,913.90.
The manic swings for AI stocks have been most dramatic in South Korea, where
the Kospi index is dominated by just two tech titans, Samsung Electronics and
SK Hynix.
Seoul's Kospi fell 5.1% Monday, coming off Friday's 17.9% surge that was its
best day in history.
In neighboring Japan, Tokyo's Nikkei 225 fell 0.9% after the United States
and Japan confirmed they had moved together to prop up the value of the
Japanese yen against the dollar. A stronger yen would help to limit inflation
in Japan, but it could also potentially hurt Japan's exporters.
___
AP Writers Matt Ott, Elaine Kurtenbach, Mayuko Ono and Mari Yamaguchi
contributed to this report.
---------
itemid:d19a8f9a77b6fceca41da3e4b6bf17aa
|
|
