US stocks slip below their records as oil prices rise 5%

The US stock market slipped below its all-time high while oil prices rose on uncertainty about when the Strait of Hormuz could reopen and get the global flow of crude going again. The S&P 500 fell 0.1 per cent Monday. The Dow Jones Industrial Average fell 0.1 per cent, and the Nasdaq composite lost 0.3 per cent. Berkshire Hathaway climbed after becoming the latest US company to top analysts’ profit expectations. Technology stocks weighed on the market. Intel fell after saying it may sell US$15 billion of stock to raise cash to take advantage of the AI frenzy. Brent crude rose 5 per cent.

The S&P 500 fell 0.1 per cent after flipping between small gains and losses, coming off its record set on Friday. The Dow Jones Industrial Average fell 133 points, or 0.3 per cent, as of 2:03 p.m. Eastern time, and the Nasdaq composite was 0.4 per cent lower.

Momentum is slowing for stocks following a rally powered by soaring profits for big US companies. Reports are on track to show that earnings per share for companies in the S&P 500 were 50 per cent higher in the spring from a year earlier, according to FactSet. That would be the best growth since five years ago, when the economy was roaring out of the chasm created by COVID.

Berkshire Hathaway is one of the latest companies to deliver a stronger profit for the last quarter than analysts expected, and the company built by legendary investor Warren Buffett said over the weekend that it’s also invested some of its massive pile of cash into stocks under its new chief executive officer, Greg Abel.

Berkshire Hathaway has been famous for buying stocks at what it considers low prices, and criticism has been high that US stocks generally look too expensive. But when they report strong profits, it helps them look less pricey.

Berkshire Hathaway’s stock rose 1.4 per cent, and its immense size made it one of the strongest forces pushing upward on the S&P 500 index.

MarineMax jumped 45.8 per cent after the retailer, marina operator, and superyacht services provider said it agreed to sell itself for about US$1.5 billion in cash to a portfolio company of Blackstone.

Varex Imaging leaped 48.7 per cent after Teledyne Technologies said it would buy the maker of X-ray imaging components for US$18.90 per share in cash.

Technology stocks were the biggest weights on the market. Nvidia fell 2.5 per cent, and Apple fell 2 per cent.

Intel fell 3.4 per cent after saying it may sell US$15 billion of its stock. Such a move would dilute the ownership stakes of existing investors, and Intel said it would likely use the cash for investments to take advantage of the huge spending under way on artificial-intelligence technology.

In the oil market, the price for a barrel of Brent crude rose 4.7 per cent to US$87.50. It had swung between US$72 and US$102 last month as hopes rose and fell that the United States and Iran could reach an agreement that would allow oil tankers to freely exit the Middle East again to deliver crude worldwide.

But hopes are turning towards caution again, and the price of Brent is back to where it was earlier this month as well as in mid-July, mid-June, and in the first week of the war in March.

Higher oil prices push inflation upward, and the main event for Wall Street this week will likely be Wednesday’s update on how bad inflation was last month. Economists expect it to show that inflation slowed to 3.4 per cent from 3.5 per cent in June.

A slowdown would mean less pressure on the Federal Reserve to raise interest rates. Higher rates would help keep a lid on inflation, but they would also slow the economy by making it more expensive for US households and companies to borrow money. They would also undercut prices for stocks and other investments.

A report on Friday showing unexpectedly weak hiring across the United States lowered Wall Street’s expectations for an upcoming hike to interest rates. But traders still see a 50 per cent chance the Fed will raise its main interest rate at its next meeting in September, according to data from CME Group.

The yield on the 10-year Treasury rose to 4.70 per cent from 4.65 per cent late Friday. That is up from 3.97 per cent before the war with Iran, and it has already sent rates for mortgages and other kinds of loans higher.

In stock markets abroad, indexes were mixed in Europe after rising in much of Asia. Japan’s Nikkei 225 jumped 2.1 per cent for one of the world’s bigger moves.

– AP