Wall Street rises as oil prices swing, ASX set to edge up
Stan Choe
US stocks are gaining strength after strong earnings reports from BlackRock and other major companies and an update on the path of inflation.
The S&P 500 rose 0.4 percent and was on track for its fourth gain in five days. The Dow Jones Industrial Average rose 175 points, or 0.3 percent, in afternoon trading, while the Nasdaq composite rose 0.6 percent.
The Australian share market is set to move slightly higher, with futures pointing to an 11-point, or 0.1 per cent, gain at the open at 5.54am AEST. The ASX gained 0.4 per cent on Wednesday. The Australian dollar is stronger at US70.12¢ at 5.11am (AEST).
Investment giant BlackRock rose 6.5 percent after the company behind some of the most popular investment funds reported stronger profits and revenue in its latest quarter than analysts expected. CEO Laurence Fink said iShares funds totaled more than US$6 trillion ($8.6 trillion) in assets under management during the quarter, roughly doubling in three years.
Bank of New York Mellon rose 3.7 percent a day earlier, following strong earnings reports from many of the largest U.S. banks. Cintas rose 4.1 percent after the provider of office uniforms, toiletries and other products similarly posted a better-than-analyst-expected profit in the latest quarter.
They helped offset the decline of Elevance Health, which fell 8.7 percent despite reporting stronger profits and revenue than analysts expected.
Many big tech companies fell and checked their gains elsewhere. Intel fell 5.5 percent and Micron Technology fell 7.4 percent.
Expectations for profit increases for US companies in the spring are high. With the indexes close to their records, they will need to beat them to justify the big moves made by stock prices.
Another report showed inflation slowed last month. That said, wholesale inflation slowed to 5.5 percent from 6 percent in May, far better than the acceleration economists had expected.
A separate report published the other day said inflation felt by U.S. consumers was not as bad as economists expected last month.
These figures ease the pressure on the Federal Reserve, which is considering raising interest rates. Higher rates will limit inflation, but they will also slow the economy and hurt the prices of all kinds of investments.
Following the inflation report, investors think there is only a 10 percent chance that the Fed will raise its key interest rate at its meeting in a few weeks. That’s lower than the roughly 42 percent probability they saw before inflation reports on Monday, according to data from CME Group.
New York Fed President John Williams’ speech also helped lower expectations. “There are encouraging reasons to expect that inflation has peaked and will decline in the coming quarters,” he said.
That helped push the yield on the 10-year Treasury note down to 4.55 percent, from 4.58 percent late Tuesday and 4.62 percent the day before.
Nevertheless, upward pressure on inflation continues due to the war with Iran, which has been subject to mutual attacks by the USA and Iran for days in the Middle East.
Iran’s Revolutionary Guard threatened on Wednesday to halt all energy exports from the Middle East due to a blockade imposed by the US military to prevent tankers carrying Iranian oil from using the Strait of Hormuz.
“Oil and natural gas exports from the region will either benefit everyone or benefit no one,” the Revolutionary Guard said.
Oil prices approached their highest levels in a month due to the war with Iran. The barrel price of Brent crude oil briefly exceeded $86 in the morning hours and then fell to $84.33 per barrel, decreasing by 0.5 percent compared to the previous day.
On stock markets overseas, technology stocks led the way as the winners of the AI boom gathered more strength after several shaky weeks.
In Asia, South Korea’s Kospi index increased by 6.2 percent. Its market is dominated by two major technology companies, Samsung Electronics and SK Hynix, and the index has experienced declines of 8.9 percent, 7.9 percent and 5.3 percent so far this month.
ASML in Amsterdam reported stronger revenue growth in the latest quarter than the chip manufacturing industry had forecast. CEO Christophe Fouquet said continued progress in the AI boom is accelerating customer growth, and the chipmaking machine maker forecast revenue growth in the summer that beat analysts’ expectations.
This strength has helped calm some of the concerns about AI that have caused stocks to tumble recently. Chief among these is the possibility that their prices will be too high due to the enthusiasm around artificial intelligence. Concerns are growing that the growing demand for AI chips and data centers could come to naught if they do not deliver enough profit and productivity to make all investments worth it.
In China, stocks rose 1.4 percent in Hong Kong and fell 0.3 percent in Shanghai after the government announced that the world’s second-largest economy grew by 4.3 percent on an annual basis last quarter.
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