Wall Street Pulls Back from Records Amid Inflation and Ongoing Conflict

Markets cool off as investors weigh economic uncertainties, rising oil prices and upcoming employment data against recent weekly gains.

Wall Street opened the week soaring higher and notching records but has calmed over the last two days. Markets are dealing with uncertainties over the on-going U.S. war with Iran and its impact on inflation.

The S&P 500 fell 13.59 points (0.2%) to 7,709.96. It pulled further away from its record set on Tuesday, though the index is still solidly on track to notch weekly gains. The Dow Jones Industrial Average fell 464.02 points (0.9%) to 53,885.10. The Nasdaq composite fell 15.09 points (0.1%) to 26,348.35.

 

Oil prices gained ground as uncertainty remains over the U.S. war with Iran that has stifled the global flow of oil. The price of Brent crude, the international standard, rose 3.8% to $82.49. A fifth of the worlds traded oil and natural gas once passed through the Strait of Hormuz. Oil prices surged as high as $113 during the conflict and higher prices have added more heat to inflation by raising the price of gasoline and raising costs for shipping.

Iran has said that it is close to a deal with Oman for reopening the Strait of Hormuz. President Donald Trump has also previously said the deal is close but the conflict has had many starts and stops over the last five months. The rate of inflation is stuck above 3% and higher costs have been squeezing businesses and households while threatening to crimp broader economic growth. The U.S. economy expanded at a sluggish 1.5% pace during the second quarter.

Employment remains strong while a weekly report showed that the number of Americans applying for unemployment benefits rose last week, though layoffs remain in the historically healthy range of the past few years. Employers pulled back on hiring in June, adding only 57,000 jobs. The latest monthly jobs report for July will be released on Friday.

Warner Bros. Discovery rose 1.7% after reporting earnings that came in ahead of what investors were expecting. Molson Coors rose 1.3% after also reporting encouraging financial results. Warner Bros. Discovery rose 1.7% after reporting earnings that came in ahead of what investors were expecting. Molson Coors rose 1.3% after also reporting encouraging financial results.

SpaceX rose 6.1% more than 911 million. SpaceX shares held by early investors and employees became eligible for sale on Thursday as a lockup period for the stock expired. That is more than double the shares that were initially offered to the public for sale during the initial public offering for Elon Musks company. SpaceX jumped as high as $225 a share following its market debut in June, but has since slumped below its initial $135 offering price. The stock is currently trading around $115.

In Asia, Japans Nikkei 225 fell 0.85% while the Topix rose 0.13%. The Kospi declined 1.38% while the small-cap Kosdaq dropped 2.56%. Australias benchmark S&P/ASX 200 was flat. Hong Kongs Hang Seng Index added 0.15% and mainland Chinas CSI 300 advanced 0.83%. European markets mostly rose.

Treasury yields rose in the bond market. The yield on the 10-year Treasury rose to 4.67% from 4.63% late Wednesday.

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