NEW YORK (AP) — A cooldown in oil prices on Friday is clashing on Wall Street with pressure building from the bond market, leaving the U.S. stock market mixed in response.
The S&P 500 was virtually unchanged in morning trading, but only after flipping between earlier gains and losses. It's coming off a three-day losing streak marred by big swings caused by rising yields in the bond market. The Dow Jones Industrial Average was up 155 points, or 0.3%,
as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.1% lower.
Stock indexes initially rose after trading began, aided by a drop in oil prices. The most actively traded contract in the market for Brent crude, the international standard, eased 1.3% to $98.97 per barrel.
It’s been yo-yoing on uncertainty about when the war with Iran will allow oil to flow freely again from the Middle East. Prices go down when hopes rise for a possible deal to fully reopen the Strait of Hormuz to oil tankers, and they go up when doubts resurface.
But a report on U.S. consumer sentiment released shortly after trading began undercut that support after it helped push Treasury yields higher. The report from the University of Michigan said U.S. consumers are bracing for inflation of 4.6% in the coming year, up from their forecast of 4% the month before. It also said that overall sentiment among consumers was not as bad as economists expected, even if it was the lowest in four months.
The expectations for high inflation are potentially dangerous for the economy because they could encourage behavior that leads to a vicious cycle that worsens inflation. Indeed, some consumers told the survey that buying some kinds of products now would help them avoid higher prices in the future.
Following the report, the yield on the 10-year Treasury rose to 5.21% from 5.18% late Thursday and is near its highest level since 2007.
High yields slow the economy by making borrowing money more expensive for everyone, while undercutting prices for stocks and other investments. Rising yields worldwide are rattling all kinds of financial markets, and yields are climbing not only because of worries about high inflation but also because big government debt loads, signs of continued economic strength and other factors.
The 10-year Treasury yield was at just 3.97% before the beginning of the war with Iran.
High yields hit stocks seen as the most expensive in particular. That has pressured stocks in the artificial-intelligence industry that soared in earlier years because of the frenzy around the technology.
As the 10-year Treasury yield rose, Nvidia reversed an early gain to dip 0.2%. A day earlier, its fall of 0.9% was the single heaviest weight on the S&P 500.
On the winning side of Wall Street, Akamai Technologies rose 5.3% after the cloud company announced an $11.6 billion, multiyear agreement with Anthropic, the company behind the Claude AI chatbot.
Costco Wholesale added 2.6% after the retailer reported a stronger profit for the latest quarter than analysts expected. Such strong profit reports from most U.S. companies have helped the stock market remain resilient despite all the worries about high inflation and oil prices.
The S&P 500 is near its all-time high set last month and on track to finish its first winning week in the last three.
In stock markets abroad, indexes ticked higher in Europe following bigger moves in Asia. Japan’s Nikkei 225 climbed 1.3%, while Hong Kong’s Hang Seng dropped 1%.
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AP Business Writers Chan Ho-him and Michelle Chapman contributed to this report.
