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Wall Street Rallies to Edge of All-Time04/14 15:28
U.S. stocks rallied to the edge of an all-time high Tuesday, and oil prices
eased as hopes climbed that the United States and Iran may try again on talks
to end their war and avoid a worst-case scenario for the global economy.
NEW YORK (AP) -- U.S. stocks rallied to the edge of an all-time high
Tuesday, and oil prices eased as hopes climbed that the United States and Iran
may try again on talks to end their war and avoid a worst-case scenario for the
global economy.
The S&P 500 added 1.2% to its leap from the day before, and the index at the
heart of many 401(k) accounts is just 0.2% below its record set in January.
The Dow Jones Industrial Average rose 317 points, or 0.7%, and the Nasdaq
composite climbed 2%. They followed gains for stock markets worldwide as
diplomats worked through back channels to arrange a new round of talks between
the United States and Iran.
If talks succeed and the war ends up being only a temporary setback for the
global economy, rather than a new normal of very high oil prices and inflation,
investors can turn their attention back to what matters most for stock prices:
How much money are companies making?
Positive trends there had stock markets worldwide doing well before the war
began, and analysts see continued growth ahead, for now at least.
Lower oil prices help bring down costs for all kinds of businesses, and the
price for a barrel of Brent crude to be delivered in June fell 4.6% to settle
at $94.79 Tuesday.
While that's still above its roughly $70 price from before the war began in
late February, it's well below the $119 peak it has hit when worries about the
war have been at their heights.
To be sure, hope has often swung quickly into doubt since the war began,
which has caused extreme and sudden reversals in financial markets. Much of the
stress has been due to the Strait of Hormuz, a narrow waterway that's the main
avenue for crude oil produced in the Persian Gulf area to reach customers
worldwide. Blockages there have kept oil off the global market, which has in
turn driven up its price.
And that has meant a blast of higher inflation. In the United States,
inflation at the wholesale level accelerated to 4% in March from 3.4% the month
before, according to the latest data released Tuesday. That was actually better
than the 4.6% rate economists expected.
The effect is worldwide. Global inflation this year looks set to accelerate
to 4.4% from 4.1% in 2025, according to the International Monetary Fund, which
had earlier thought inflation would slow to 3.8%.
The IMF on Tuesday also downgraded its forecast for global economic growth
to 3.1% this year from the 3.3% it had forecast in January.
On Wall Street, strong profit reports from companies are helping to make up
for such worries. Over the long term, stock prices tend to follow the path of
corporate profits, and analysts are forecasting S&P 500 companies will report
solid growth of more than 12% for the most recent quarter, according to FactSet.
Optimism remains high enough that analysts have raised their estimates since
the war began for S&P 500 profits over the first six months of the year,
according to strategists at Morgan Stanley.
BlackRock gained 3%, and Citigroup rose 2.6% Tuesday after the financial
companies reported stronger profit and revenue for the latest quarter than
analysts expected.
JPMorgan Chase likewise delivered a better-than-expected quarter, but its
stock dipped 0.8% as CEO Jamie Dimon said bank officials cannot predict how the
"increasingly complex set of risks" will play out given so much uncertainty.
Amazon climbed 3.8% after saying it would buy Globalstar, a mobile satellite
services company, for $90 per share in either cash or Amazon stock. Globalstar
jumped 9.6%.
Software companies also rallied for a second day, recovering more of their
sharp losses from earlier in the year on worries they could be made obsolete by
artificial-intelligence technology. AppLovin rose 3.9%, and an ETF from iShares
tracking the software industry added 1%.
That in turn helped private-credit companies recover. These companies have
lent money to software businesses and others that may be under threat from AI,
and some have seen a rush of investors trying to pull out their money.
Blue Owl Capital rose 8.5% to trim its loss for the year so far below 39%.
Ares Management climbed 5.6%, and Apollo Global Management rose 4.4%.
They helped offset a 5.7% drop for Wells Fargo, which reported weaker
revenue for the latest quarter than analysts expected.
All told, the S&P 500 rose 81.14 points to 6,967.38. The Dow Jones
Industrial Average gained 317.74 to 48,535.99, and the Nasdaq composite climbed
455.35 to 23,639.08.
In stock markets abroad, indexes rose across much of Europe and Asia. South
Korea's Kospi jumped 2.7%, and Japan's Nikkei 225 rose 2.4% for two of the
bigger gains.
In the bond market, Treasury yields eased as the fall for oil prices took
some of the pressure off inflation. The yield on the 10-year Treasury fell to
4.25% from 4.30% late Monday.
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