The US stock market edged higher as investors digested mixed signals from the Middle East, where hostilities persist alongside diplomatic talks. The S&P 500 rose moderately, while the Nasdaq saw a stronger advance, driven largely by technology shares. Meanwhile, the Dow Jones held nearly steady with a slight dip. Despite recent military “self-defense” strikes conducted by the US in southern Iran targeting missile launch sites and mine-laying boats, hopes for a diplomatic resolution helped buoy market sentiment.
Oil prices played a pivotal role in market movements. International crude benchmarks partially recovered from a sharp drop, while US crude declined further. The volatile oil market reflects the ongoing disruption in supply caused by regional conflict, including the closure of the Strait of Hormuz to most tankers. This bottleneck has restrained crude exports from the Persian Gulf, contributing to elevated energy costs worldwide and amplifying inflationary pressures.
Stocks of companies with high fuel expenses reacted positively to the easing oil prices. For instance, United Airlines shares surged significantly, while Carnival Cruises also posted gains, benefiting from the potential for lower operating costs. The decline in oil helped reduce yields on long-term US Treasury bonds, easing borrowing costs and alleviating some pressure on equity valuations. The 10-year Treasury yield dropped modestly, offering relief after recent increases had threatened economic growth and stock market stability.
Technology stocks sustained their recent momentum, bolstered by favorable analyst revisions. Micron Technology led gains in the sector, jumping sharply after UBS analysts raised their price targets, citing ongoing strong demand for memory products. This surge offset setbacks seen in other sectors, such as retail, where AutoZone shares fell following a mixed earnings report that fell short on revenue expectations despite solid profit results.