US stocks today: Wall Street steadies as oil rally cools; investors watch Iran war risks
US stocks traded steadier on Wednesday after two days of sharp swings, as oil prices paused their rapid climb amid continued uncertainty over the economic fallout from the war involving Iran.The S&P 500 rose 0.5 per cent in morning trade. The Dow Jones Industrial Average gained 180 points, or 0.4 per cent, as of 10:15 a.m. Eastern time, while the Nasdaq Composite advanced 0.9 per cent, AP reported.The relatively calmer session followed intense volatility earlier in the week, when markets around the world swung sharply in response to movements in oil prices linked to the conflict.Asian markets had opened the day under heavy pressure. South Korea’s Kospi index plunged 12.1 per cent, marking its worst day on record as investors reacted to escalating geopolitical uncertainty.Oil prices moderated as trading progressed from Asia to Europe and the United States. Brent crude, the international benchmark, briefly crossed $84 per barrel before easing to $81.45, up 0.1 per cent. US benchmark West Texas Intermediate crude slipped 1 per cent to $73.81 a barrel.Oil’s surge earlier in the week had raised concerns that disruptions in the Strait of Hormuz – a passage used by roughly a fifth of the world’s oil supply – could push prices sharply higher and fuel global inflation.The market found some relief after US President Donald Trump said on Tuesday that the US Development Corp. would provide insurance coverage for oil tankers and other ships passing through the Strait of Hormuz. He also said the US Navy could escort vessels through the waterway “if necessary”.That announcement helped calm fears sparked by Iran’s threat to set fire to ships crossing the narrow route.However, analysts cautioned that the risk has not disappeared.The promise of insurance and possible naval escorts “only mitigate, but do not eliminate” the risk of oil prices rising further, Mizuho Bank said in a commentary. Higher insurance costs could add $5 to $15 per barrel to shipping costs, it noted.In financial markets, investors remain focused on how long the conflict could last, how much oil prices could rise and the potential impact on inflation and corporate profits.“I think the Iran situation is getting out of hand, and I think that US President Donald Trump miscalculated enormously,” said Francis Lun, CEO of Venturesmart Asia. “The situation is very grim.”Historically, however, US markets have tended to recover quickly from geopolitical shocks in the Middle East, provided oil prices do not spike excessively. Some professional investors are therefore urging patience during the volatility.Within the S&P 500, a slight majority of stocks declined. Energy companies that had rallied earlier in the week pulled back, with ConocoPhillips falling 2.6 per cent and APA dropping 2.8 per cent.Gains in major technology stocks helped keep the broader market higher. Amazon climbed 2.8 per cent, while Nvidia added 1.2 per cent.European markets recovered after sharp declines in Asia. France’s CAC 40 rose 1.1 per cent and Germany’s DAX gained 1.7 per cent. Earlier, Hong Kong’s Hang Seng had fallen 2 per cent and Japan’s Nikkei 225 dropped 3.6 per cent alongside Seoul’s historic slide.In the bond market, US Treasury yields edged higher. The yield on the 10-year Treasury rose to 4.08 per cent from 4.06 per cent late Tuesday.Encouraging economic data also supported sentiment. One report showed stronger-than-expected growth in US services industries such as real estate and finance last month. Another report indicated that private-sector employers added more jobs than economists had anticipated.The data could offer clues ahead of Friday’s closely watched government employment report.The stronger readings present a mixed picture for the Federal Reserve, which is trying to keep inflation under control while maintaining a healthy labour market. Rising oil prices complicate that task by adding upward pressure on inflation.If inflation remains elevated, the Fed may keep interest rates higher for longer. While that could help curb price pressures, it would also keep borrowing costs elevated for households and businesses.Before the escalation in the Middle East conflict, the Fed had been expected to resume interest-rate cuts later this year. Now, traders are pushing back those expectations as they assess the war’s potential impact on inflation.
