NEW YORK (AP) — Rising oil prices are sending stocks lower on Wall Street Thursday, as the price for a barrel of Brent climbs back above $104.
The S&P 500 fell 0.3% and is on track for a second modest loss after setting its all-time high earlier this week. The Dow Jones Industrial Average was down 143 points, or 0.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.
Stocks bent under the pressure of a 4.1% rise for the price of a barrel
of Brent crude oil, the international standard, to $104.35. It’s been swinging between $96 and nearly $110 over the last month on uncertainty about when the war with Iran will allow the global energy industry to return to normal.
More expensive oil pushes inflation higher, which in turn helps send Treasury yields upward in the bond market. The yield on the 10-year Treasury rose to 5.29% from 5.28% late Wednesday. It got above 5.35% earlier in the morning, up from less than 4% before the war with Iran began, which is a major move for the bond market.
Also helping to support yields was the latest report to suggest the U.S. economy is continuing to chug along. Fewer U.S. workers applied for unemployment benefits last week, which may mean companies are laying off fewer workers. But Treasury yields pared their gains after the price for Brent oil pulled back from its high point of nearly $105.50 during the morning.
The 10-year Treasury yield remains near its highest level since 2002, and higher yields slow the economy by making it more expensive for everyone to borrow money. High yields also put downward pressure on prices for stocks and other investments, and those seen as the most expensive often feel the brunt.
Nvidia, the chip company that’s ridden the tidal wave of demand created by the artificial-intelligence technology frenzy, fell 1.3% and was the heaviest single weight on the S&P 500.
That was even though a bellwether for the AI chip industry, Taiwan Semiconductor Manufacturing Co., reported growth for September that suggested its revenue for the latest quarter was strong enough to top analysts’ expectations.
Nvidia and other stocks have been able to hit records recently despite the challenges of high bond yields and inflation because investors expect them to continue to make even bigger profits. That puts pressure on them to at least match those expectations.
Analysts are forecasting S&P 500 companies will deliver nearly 30% growth in their earnings per share this upcoming reporting season. That’s a high bar.
Levi Strauss on late Wednesday reported a bigger profit for its latest quarter than analysts expected, while raising its forecast for profit over its full fiscal year. But its stock nevertheless fell 4.3% after its growth in revenue fell short of analysts’ expectations.
They helped offset a 0.8% rise for PepsiCo, which reported slightly stronger profit and revenue for the latest quarter than analysts expected.
In stock markets abroad, South Korea’s Kospi fell 2.6% for one of the world’s larger losses. It was hurt by a 2.4% drop for Samsung Electronics, one of its two dominant stocks. The tech giant said its operating profit for the latest quarter likely soared 782% from a year earlier, but that wasn’t enough to satisfy investors.
Indexes fell across much of the rest of Asia and Europe.
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AP Business Writers Chan Ho-him and Michelle Chapman contributed to this report.
