The S&P 500 slipped to close Thursday's session marginally lower after rising Middle East tensions pushed oil prices and Treasury yields higher, even as reports of a possible US-Iran de-escalation pulled the index off its session lows. Meta jumped on a new AI device while Microsoft and Oracle fell, and traders raised bets on another Federal Reserve rate hike.
The S&P 500 ended Thursday's session marginally lower, slipping 0.02% to close at 7,704.13 points, as an escalation in Middle East tensions pushed oil prices and Treasury yields higher. The Nasdaq edged up 0.01% to 26,939.37 points. The Dow Jones Industrial Average declined 0.31% to 51,349.98 points.
Both indexes pared steeper losses after Reuters reported that US and Iranian negotiators were exploring a phased path out of war, one that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.
Oil and yields jump on Middle East risk
Brent crude rose more than 3% to nearly $107 a barrel after a Houthi missile attack on Saudi Arabia revived fears of supply disruption, following a week of sharp exchanges between US and Iranian leaders at the UN General Assembly. The 30-year Treasury bond yield climbed to its highest level since 2004, making safe-haven Treasuries relatively more attractive than stocks with uncertain returns. Bill Northey, senior investment director at U.S. Bank Wealth Management, said: "This just reinforces the view that we're dealing with one major market catalyst right now."
Big tech stocks move in different directions
Among AI-related heavyweights, Microsoft slipped 0.5% and Broadcom lost 1.3%, while Advanced Micro Devices rose 2.4%. Meta Platforms climbed 4.5% a day after unveiling a small handheld device for use with its recently launched AI assistant. Oracle fell 3.5% after a report said it sent a "force majeure" notice to a New Mexico data center, and shares of project developer Blue Owl also fell sharply.
Fed rate-hike bets keep building
Data on Wednesday suggested strong business activity, lifting expectations that the Federal Reserve will raise interest rates again following its 25-basis-point increase last week. Traders are now pricing in a nearly 70% chance of another hike next month, according to the CME FedWatch Tool. New York Fed President John Williams, who has a vote on the Federal Open Market Committee, said Thursday it was reasonable to think the central bank might need to raise rates again before year-end. The S&P 500 has traded at just under 19 times expected earnings this week, its lowest valuation since 2023, according to LSEG data.
MGM Resorts slumped 11% after media mogul Barry Diller's People Inc withdrew its proposal to acquire the casino operator. Declining stocks outnumbered advancing ones across the S&P 500 by a 1.9-to-one ratio.
Source: Investing.com
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