Key Takeaways:
• S&P 500 edges up 0.05% while Dow gains 235 points on oil retreat
• Brent crude falls 3.9% from $100 as Pakistan-Iran peace talks gain traction
• Fed rate hike odds jump to 38% ahead of Wednesday's FOMC decision
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Wall Street steadies as oil retreats 3.9% on peace talk hopes
U.S. stocks stabilized and oil pulled back from $100 as reports of Pakistan-Iran talks with the U.S. offered relief from a week of geopolitical turmoil.
The S&P 500 edged up 0.05% to 7,411.98 while the Dow Jones Industrial Average added 235.60 points, or 0.46%, to 51,947.25. The Nasdaq Composite fell 0.64% to 24,975.82, dragged lower by a deepening tech selloff that has gripped markets this week.
"It looks as if developments in the Middle East have moved in a positive direction over the weekend, adding some credibility to the notion that oil above $100 a barrel seems to induce de-escalatory behavior from both sides," Sally Auld, a strategist at National Australia Bank, wrote in a note.
Brent crude fell about 3.9% to around $96.78 a barrel, retreating after Thursday's surge past $100 — the first time since May. The decline followed reports that Pakistan and Iran were exploring a path toward new talks with the U.S., though President Trump told Axios he was considering an attack on Iran that would be "bigger than ever before." The pullback in oil eased pressure on bond yields, with the 10-year Treasury yield dropping 2.5 basis points to 4.678%. Gold rose 1.37% to $4,067.60 per troy ounce, while the dollar edged up 0.03 point on the ICE US Dollar Index.
The repricing has major implications for next week's Federal Reserve meeting. Traders are now pricing in roughly a 38% chance of a rate hike, up from just 13% a week ago, as surging energy prices revive inflation fears. The coming week brings a packed calendar: the Fed's interest-rate decision Wednesday, the advance estimate on second-quarter gross domestic product Thursday, and earnings from Meta, Microsoft, Apple and Amazon.
The session saw sharp divergence beneath the index level. On the NYSE, advancing issues outnumbered decliners 1,639 to 1,052, but the tech-heavy Nasdaq bore the brunt of selling. Intel slid 7.9% despite reporting quarterly revenue above analyst estimates, as investors focused on the broader tech rout. SAP rose 9.3% after the German software company reported better-than-expected cloud revenue, offering some relief to the battered software sector. American Express fell 4.3% on slower-than-hoped growth, while Bank of America gained after increasing its quarterly dividend 14% to 32 cents a share. Volkswagen declined after cutting its full-year sales and delivery forecasts.
U.S. business activity expanded at an eight-month high in July, with S&P Global's Flash Composite PMI rising to 53.6 from 51.9 in June, led by a surge in services activity partly boosted by the FIFA World Cup and USA 250th anniversary celebrations. New home sales ticked up to 628,000 in June from 618,000 in May, topping economist expectations of 606,000, though the median sales price fell 3.3% to $398,300.
Global bond markets took a beating this week even as U.S. yields eased Friday. The German 10-year yield hit its highest since 2011, French yields crossed 4% for the first time since 2009, and U.K. gilts closed above 5% for a fifth straight session — the longest such streak since 2008.
This article is for informational purposes only and does not constitute investment advice.
