NEW YORK: The S&P 500 ended marginally down on Thursday, with Microsoft dipping and Meta Platforms rising, as uncertainty about the Middle East lifted oil prices and Treasury yields.
The S&P 500 and Nasdaq rebounded from session lows after Reuters reported US and Iranian negotiators were exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.
US and Iranian leaders exchanged barbs this week at the UN General Assembly. Brent crude prices rose over 3% to nearly US$107 per barrel after a Houthi missile attack on Saudi Arabia revived fears of supply disruptions.
"This just reinforces the view that we're dealing with one major market catalyst right now," said Bill Northey, senior investment director at US Bank Wealth Management. "It's really all about oil and inflation and the effect on interest rates, and then the interest rate cascading across the capital markets."
AI heavyweights were mixed, with Microsoft dipping 0.5% and Broadcom losing 1.3%, while Advanced Micro Devices rose 2.4%.
Meta Platforms climbed 4.5%, a day after the social media company unveiled a small handheld gadget for use with its recently launched AI assistant.
Oracle fell 3.5%after a report said the company sent a "force majeure" notice to a New Mexico data center. Shares of Blue Owl, the project's developer, also fell sharply.
Treasury yields rose, with the 30-year Treasury bond yield reaching its highest since 2004. Higher yields make safe-haven Treasuries relatively more attractive to investors than stocks with uncertain returns.
The S&P 500 declined 0.02% to end the session at 7,704.13 points.
The Nasdaq edged up 0.01% to 26,939.37 points, while the Dow Jones Industrial Average declined 0.31% to 51,349.98 points.
Eight of the 11 S&P 500 sector indices fell, led lower by materials, down 1.18%, followed by a 0.96% loss in consumer staples.
The S&P 500 this week has traded just under 19 times expected earnings, its lowest valuation since 2023, according to LSEG data. AI-related heavyweights are responsible for much of the recent increase in earnings expectations.
US President Donald Trump welcomed Chinese President Xi Jinping to the White House for a summit expected to be heavy on symbolism but light on substance related to issues including AI, trade, Taiwan and the war in the Middle East.
Data on Wednesday suggesting strong business activity has led to increased expectations the Federal Reserve will raise interest rates again following its 25-basis-point hike last week. Traders are now pricing in a nearly 70% chance of a hike next month, according to the CME FedWatch Tool.
New York Fed president John Williams, who has a vote on the Federal Open Market Committee, on Thursday said it was reasonable to think that the US central bank might need to raise interest rates again before the end of the year.
MGM Resorts slumped 11% after media mogul Barry Diller's People Inc withdrew its proposal to purchase the casino operator.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.9-to-one ratio.
The S&P 500 posted 14 new highs and 41 new lows; the Nasdaq recorded 53 new highs and 238 new lows.
Volume on US exchanges was 16.8 billion shares traded, compared to an average of 16.7 billion shares over the previous 20 sessions. — Reuters
