The U.S. stock market hovered near its record highs on Thursday as oil prices continued to decline, fueled by hopes that a deal may soon allow tankers to transport crude from the Persian Gulf to global customers. Brent crude, the international benchmark, fell another 4.5% to $96.70 per barrel, down from over $115 earlier this week. Although crude and gasoline remain significantly more expensive than before the conflict with Iran began, optimism grew in financial markets after Iran indicated it was reviewing the latest U.S. proposals to end the war.
On Wall Street, the S&P 500 added 0.1%, building on its all-time high set the previous day. A spokesperson for Pakistan's Foreign Ministry stated, "We expect an agreement sooner rather than later," as Pakistan has been mediating between the United States and Iran. The hope is that an end to the war will reopen the Strait of Hormuz, whose blockade has trapped oil tankers in the Persian Gulf and driven up prices for crude and a wide range of products worldwide.
The Dow Jones Industrial Average slipped 176 points, or 0.4%, as of 10:30 a.m. Eastern time, while the Nasdaq composite rose 0.5% to its own record.
Wall Street has previously rallied on hopes for a swift end to the war with Iran, only to be disappointed. This pattern could repeat, and tensions remain high after a U.S. fighter jet shot out the rudder of an Iranian oil tanker in the Gulf of Oman on Wednesday as it attempted to breach the American blockade of Iran's ports.
Corporate Earnings Support Market
Despite uncertainties, a strong batch of corporate earnings reports for the first quarter has bolstered the U.S. stock market. Stock prices tend to follow corporate profits over the long term. Datadog surged 28.6% after the cloud monitoring platform exceeded analysts' profit expectations. Albemarle rose 11.2%, and Vistra gained 2.6%, both also delivering better-than-expected results.
These gains offset a 13.1% drop for Whirlpool, which reported much weaker results than anticipated. The appliance maker said it would raise prices by at least 10% on some products while accelerating cost cuts, as it faces weaker consumer confidence in the U.S.
Shake Shack fell 28.8% after its quarterly results fell well short of analysts' expectations. McDonald's held steadier, rising 0.6% after its revenue edged past forecasts, driven by a new burger and continued emphasis on value.
Bond Market and Economic Data
In the bond market, Treasury yields fell alongside oil prices. The yield on the 10-year Treasury eased to 4.34% from 4.36% late Wednesday and down from 4.45% at the start of the week. Lower yields can reduce rates for mortgages and other loans, potentially boosting the economy and pushing stock prices higher. However, the 10-year yield remains well above its pre-war level of 3.97%.
Mixed economic reports were released Thursday. One showed a slight increase in unemployment benefit applications, but less than economists had expected. Another indicated that U.S. worker productivity improved by only half the anticipated amount last quarter.
In international markets, European indexes fell after a stronger finish in Asia. Japan's Nikkei 225 surged 5.6% as trading resumed after a holiday, catching up with earlier gains in Asian markets. The index hit a record, soaring nearly 71% over the past 12 months, driven by strength in tech stocks benefiting from the artificial intelligence boom. Takashi Hiroki, chief strategist at MONEX, commented, "I think it's a kind of bubble because buying activity concentrated on leading AI, artificial intelligence stock and semiconductor-related stocks. It's a situation where only semiconductor stocks are being bought."
