Contracts for the tech-heavy Nasdaq 100 rose 0.9% and those for the S&P 500 Index climbed 0.4% in early Asian trading after broadly positive earnings from megacap companies. Alphabet Inc. and Amazon.com Inc. shares climbed in after-market trading, while Meta Platforms Inc. slumped on spending concerns. Chipmaker Qualcomm Inc. rallied 13% after making headway in the data-center market. Samsung Electronics Co.’s profit also beat estimates.
Meanwhile, Brent crude climbed 1.9% at the open to $120.30 a barrel Thursday, after rallying to the highest level since June 2022 on Wednesday. Oil is climbing with no signs of progress toward a resolution to the Iran war that’s roiled global markets following the near-closure of the crucial Strait of Hormuz. Asian shares fell at the open.
The higher oil prices and a hawkish hold by the Federal Reserve weighed on Treasuries, with the yield on the 10-year rising more than eight basis points to 4.43% during the US session. Australian bonds tracked Treasuries lower early Thursday as expensive oil stoked inflation. Japanese 10-year bond yields rose to the highest since 1997.
“As the MAG7 profit results roll out, the money printing of their businesses and profitability stands in stark contrast to the ever climbing US debt and yield story,” said Martin Whetton, head of financial markets strategy at Westpac Banking Corp.
From surging oil prices driven by the Iran war to a divided Federal Reserve holding rates steady and megacap tech earnings, traders are grappling with a barrage of whipsawing headlines. With oil climbing to four-year highs and 10-year Treasury yields at the highest since July, the backdrop presents a test for a global equity rally that has erased war-related losses and pushed US markets to new highs.There’s more for traders to parse Thursday with the European Central Bank and the Bank of England set to announce policy decisions. Then, Apple Inc. is scheduled to report earnings. Then there’ll be more US economic data release.In other corners of the market, the yen was slightly stronger early Thursday after the currency extended its slide beyond 160 per dollar to its weakest mark this year, fueling risk that officials may step into the market to offer support.
Gold edged up 0.3% to $4,560 an ounce, while Bitcoin advanced to about $75,790.
Amazon.com Inc. shares rose 5% in after-market trading after seeing the fastest sales growth for its cloud unit in more than three years. Alphabet Inc. also gained in late after reporting quarterly revenue and profit that beat projections. Meta plunged 6.5% on escalating concerns over the AI spending spree.
Also, Anthropic PBC has begun weighing a fresh funding round that would value the artificial intelligence developer at more than $900 billion, according to people familiar with the matter, potentially leapfrogging its longtime rival OpenAI as the world’s most valuable AI startup.
The moves in oil came as President Donald Trump told Axios he will not lift a naval blockade of Iran’s ports until he secures a deal with Tehran to address the country’s nuclear program, extending a standoff over the Strait of Hormuz that has caused a global energy crisis.
A market-wide shift toward expecting a longer conflict has sharpened focus on US supplies, now all-the-more critical to offset disruptions to Middle Eastern flows. Government data published Wednesday show that domestic oil stockpiles are declining as American exports surge to record highs.
“The longer the strait is closed, the higher prices go,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities Inc. “A longer-term waiting game is a near-term bullish catalyst for crude prices, however it may be just the recipe needed to bring the conflict to an eventual end game.”
Earlier, the Fed left rates unchanged, but revealed a deepening division over the outlook for policy. Traders have all but abandoned wagers on a rate cut this year and began pricing in the chances of a hike in 2027.
Fed officials tweaked their statement, saying “developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” They repeated the phrase referring to “the extent and timing of additional adjustments” to rates.
Jerome Powell’s press conference was his last at the helm of the central bank after the Justice Department dropped a controversial criminal investigation into the Fed, clearing the way for the Senate confirmation of Kevin Warsh as the next chair. Powell said he’ll remain at the central bank as a governor.
The gathering revealed a deepening division. Cleveland Fed President Beth Hammack alongside Minneapolis’ Neel Kashkari and Dallas’ Lorie Logan “supported maintaining the target range for the federal funds rate but did not support inclusion of an easing bias in the statement at this time.” Governor Stephen Miran dissented in favor of a cut.
“The three dissents on the statement’s language point to a marginally more hawkish tilt, as some officials prepare for the possibility that inflation remains higher for longer,” said Angelo Kourkafas at Edward Jones. “We expect the Fed to remain firmly on hold in the months ahead.”
