Oil prices were rising Monday following the latest fighting to threaten the U.S.-Iran ceasefire, but Wall Street didn’t appear very worried, with U.S. stocks hanging near their records.
The S&P 500 was virtually unchanged from its all-time high set on Friday. The Dow Jones Industrial Average was down 102 points, or 0.2%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was flat. Both are also coming off records.
Some of the sharpest losses hit companies with big fuel bills hurt by the rise in oil prices. United Airlines lost 2.9%, and cruise-operator Carnival fell 2.7% as the price for a barrel of international benchmark Brent crude oil climbed Monday by almost 7% to $97.47. That clawed back a chunk of its loss from last week and means it’s still well above its price of roughly $70 from before the war.
Expensive oil has already sent inflation around the world higher, which not only increases bills for households but also pushes up bond yields. High yields worldwide recently have threatened to slow economies and undercut prices for stocks and all kinds of other investments.
Some of the hardest hit by high interest rates are smaller companies, which have a tougher time borrowing to grow when loans are more expensive to repay. The Russell 2000 index of the smallest U.S. stocks sank 1%, much more than the rest of the market.
But hope seems to be remaining on Wall Street that the U.S. and Iran will ultimately reach an agreement to reopen the Strait of Hormuz, allow deliveries of oil to resume from the Persian Gulf and ease the upward pressure on inflation.
Iran announced Monday it had instructed its Houthi allies in Yemen to attack the other key Middle Eastern waterway, the Bab el-Mandeb strait In peace time, around 14% of global maritime trade passes through the waterway, according to the International Transport Forum, while about 20% of the world’s crude oil would typically transit the Strait of Hormuz.
CBS/AP
