Wall Street/ oil prices/ stock market update/ Federal Reserve/ Treasury yields/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stocks dipped slightly on Thursday as oil prices continued to climb, driven by concerns over escalating Middle East tensions. The S&P 500 and Nasdaq edged lower, while the Dow fell 140 points. Brent crude rose above $75 per barrel. Treasury yields increased as the labor market showed resilience, while investors await key economic updates.
Wall Street Slips as Oil Prices Surge Amid Middle East Tensions: Quick Looks
- Stock Market Drift: U.S. stocks slipped Thursday, with the S&P 500 down 0.1% and the Dow falling by 140 points.
- Oil Prices Climb: Brent crude oil rose 2.4%, topping $75 per barrel due to concerns over potential disruptions from the Middle East conflict.
- Economic Resilience: Despite rising oil prices, jobless claims remained low, reflecting a steady labor market.
- Fed’s Interest Rate Outlook: Traders are betting on smaller Fed rate cuts as economic data stabilizes, with the two-year Treasury yield rising to 3.67%.
Stock Market Dips While Oil Prices Continue Climbing
Deep Look
Wall Street opened Thursday with slight declines as investors remained cautious amid surging oil prices and rising Middle East tensions. The S&P 500 edged down 0.1%, continuing a shaky week, while the Dow Jones Industrial Average lost 140 points, or 0.3%. The Nasdaq composite also slipped by 0.1%, as the market awaits developments following Iran’s missile attack on Israel earlier this week.
Oil Prices and Geopolitical Concerns
A key factor affecting markets is the ongoing rise in crude oil prices. Brent crude, the global oil benchmark, climbed 2.4%, surpassing $75 per barrel—up from under $72 at the start of the week. Iran’s role as a major oil producer has raised concerns that escalating conflict could lead to disruptions in the flow of crude oil from neighboring countries in the region.
Despite these fears, oil prices are being somewhat stabilized by indications of strong supply levels. However, the market remains on edge as the situation in the Middle East continues to develop, with Israel’s potential response to Iran’s actions under close watch.
Resilient Labor Market and Treasury Yields
In the bond market, Treasury yields rose on Thursday after labor market data suggested that layoffs remain relatively low. The Labor Department reported that while there was a slight increase in unemployment claims last week, the number remains historically low, reinforcing the view that the job market is holding steady.
The central focus for Wall Street remains on how the labor market will fare following the Federal Reserve’s recent efforts to keep interest rates high in its bid to curb inflation. The Fed’s aggressive rate hikes over the last year have weighed on the economy, but recent moves—including last month’s interest rate cut, the first in four years—have aimed to give the economy a boost.
The Fed is aiming for a “soft landing,” balancing the need to control inflation while supporting the labor market. The next big data point for investors will come on Friday with the release of September’s jobs report, which is expected to show a slight slowdown in hiring.
Fed’s Next Move and Stock Market Reaction
The outlook for Federal Reserve policy is shifting, with traders now expecting a more measured approach to rate cuts. The two-year Treasury yield, closely linked to Fed rate expectations, rose to 3.67% on Thursday, as traders pared back bets that the central bank will opt for a larger half-percentage-point rate cut. Instead, expectations are leaning toward a traditional quarter-point reduction.
The stock market’s near-record levels are fueled by optimism that the U.S. economy can continue growing despite the Fed’s cautious stance. However, slower job growth could influence future Fed decisions, particularly if Friday’s jobs report comes in weaker than expected. Economists predict that September’s hiring will show an overall gain of 140,000 jobs, a slight dip from the 142,000 added in August.
Company Performances and Global Markets
On Wall Street, a few corporate earnings reports have also influenced market movement. Shares of Levi Strauss dropped 7.4%, despite the denim maker reporting stronger-than-expected profits for the quarter. Investors were disappointed by Levi’s revenue, which fell short of forecasts, and the company announced it is considering options for its Dockers brand after its revenue dropped 7%.
In global markets, Japan’s Nikkei 225 index surged 2% as speculation grows over when the Bank of Japan may raise interest rates. Hong Kong’s Hang Seng index, which has experienced sharp swings recently, fell by 1.5% on Thursday. The volatility comes as China’s markets remain closed for a weeklong holiday, funneling trading into Hong Kong amid expectations for economic stimulus from Beijing.
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