The S&P 500 slipped Thursday as Middle East uncertainty pushed oil prices and Treasury yields higher, though the index pared losses after a report that US and Iranian negotiators were exploring a path to reopen the Strait of Hormuz. Traders are also pricing in higher odds of another Federal Reserve rate hike next month.
S&P 500 pares losses as oil and yields climb
Wall Street fell Thursday as uncertainty about the Middle East lifted oil prices and Treasury yields, but stocks came off session lows after Reuters reported US and Iranian negotiators were exploring a deal to reopen the Strait of Hormuz, a path that would also include Washington lifting its economic blockade of Iran.
Brent crude prices rose about 4% to $107 per barrel after a Houthi missile attack on Saudi Arabia revived fears of supply disruptions. Treasury yields rose too, with the 30-year bond yield reaching its highest level since 2004.
Seven of the 11 S&P 500 sector indexes declined, led lower by materials, down 1.01%, followed by a 0.66% loss in information technology. According to Reuters: "This just reinforces the view that we're dealing with one major market catalyst right now", said Bill Northey, senior investment director at U.S. Bank Wealth Management.
Fed rate-hike bets build
Data on Wednesday suggesting strong business activity has raised expectations the Federal Reserve will raise interest rates again following its 25-basis-point hike last week. Traders are now pricing in a nearly 70% chance of a rate hike next month, according to the CME FedWatch Tool.
Individual movers
Among AI heavyweights, Microsoft and Broadcom fell about 1% while Advanced Micro Devices rose 1%. Meta Platforms added 3.4% a day after unveiling a handheld gadget for its AI assistant.
Oracle lost 4.1% after a report said the company sent a "force majeure" notice to a New Mexico data center, while MGM Resorts slumped 11% after Barry Diller's People Inc withdrew its proposal to purchase the casino operator.
Source: Investing.com
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