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Oil Prices Sink, Stocks Rally Worldwide05/06 09:33
Oil prices are sinking Wednesday, and stock markets are bursting higher
worldwide with hopes that the United States and Iran are nearing a deal to
allow ships to deliver crude from the Persian Gulf once again to their
customers.
NEW YORK (AP) -- Oil prices are sinking Wednesday, and stock markets are
bursting higher worldwide with hopes that the United States and Iran are
nearing a deal to allow ships to deliver crude from the Persian Gulf once again
to their customers.
The price for a barrel of Brent crude oil, the international standard, sank
5.8% to $103.54, down from more than $115 early this week. It dropped as
President Donald Trump said the Strait of Hormuz could be "OPEN TO ALL" if Iran
accepts a reported agreement that the U.S. president did not detail.
The small strait has caused big trouble for the global economy because the
war with Iran has blocked oil tankers from using it to exit the Persian Gulf. A
reopening could allow oil to flow freely again and remove upward pressure on
inflation that's driven prices up for all kinds of products worldwide.
On Wall Street, the S&P 500 climbed 0.9% and was heading for another record.
The Dow Jones Industrial Average was up 498 points, or 1%, as of 10:15 a.m.
Eastern time, and the Nasdaq composite was 1.1% higher.
Stock markets abroad had even bigger gains, and indexes jumped 6.5% in
Seoul, 1.2% in Hong Kong, 2.2% in London and 3% in Paris.
Of course, hopes have risen several times already on Wall Street about a
possible end to the war with Iran, only to quickly get dashed. That could
happen again, and oil prices pared some of their steepest losses from Wednesday
morning. The price for a barrel of Brent briefly dove below $97 before
returning above $100 after Trump threatened to start bombing "at a much higher
level and intensity" if Iran does not accept the agreement.
But Wall Street nevertheless latched onto potentially encouraging signals.
Trump said Tuesday he was pausing his effort to forcefully reopen the Strait of
Hormuz to commercial ships. And China's foreign minister called for a
comprehensive ceasefire following a meeting with Iran's foreign minister. That
could be influential because of how closely tied Iran is to China economically
and politically.
Plus, in the background, big U.S. companies continue to turn in much
stronger profits for the start of 2026 than analysts expected. That's helping
to support the stock market despite all the uncertainties about the war.
AMD helped lead the market with a surge of 15.8% after it joined the list of
big-name companies topping expectations for both profit and revenue. CEO Lisa
Su said the chip company benefited from continued growth from
artificial-intelligence technology, which is demanding tremendous amounts of
computing power from data centers.
AMD also said its revenue growth could accelerate in the current quarter to
roughly 46% from a year earlier.
Another company enmeshed in the AI industry, Super Micro Computer, rallied
18.1% after likewise delivering stronger earnings than analysts expected.
Nvidia, the chip company that became the poster child of the AI boom, rose 4.4%.
CVS Health climbed 7.5% after delivering better results for the first
quarter than analysts expected and raising its financial forecasts for the full
year. The Walt Disney Co. gained 8.3% after topping analysts' expectations for
profit and saying its "Zootopia 2" movie helped draw people to its streaming
business, parks and cruise ships. Uber Technologies drove 7.6% higher after
giving a bookings forecast for the spring that was higher than analysts
expected.
Outside of earnings reports, companies with big fuel bills jumped on hopes
that oil prices will continue to ease. That included gains of 4.4% for United
Airlines, 5.1% for Carnival and 5.6% for Royal Caribbean.
In the bond market, Treasury yields eased sharply as falling oil prices took
pressure off inflation. The yield on the 10-year Treasury dropped to 4.35% from
4.43% late Tuesday. That's a notable move for the bond market.
Lower yields can bring down rates for mortgages and other kinds of loans
going to U.S. households and businesses, which could boost the economy. Lower
yields also tend to push upward on prices for stocks and other kinds of
investments. The 10-year yield, though, remains well above its 3.97% level from
just before the war.
In stock markets abroad, South Korea's Kospi jumped above the 7,000 level
for the first time to a record following big gains for AI winners, including
Samsung Electronics and SK Hynix.
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