‘Going sideways’: Wall Street tanks as oil prices climb

• US stocks dipped overnight over fears that the price of oil will continue to remain high with no definite end in sight.
• Oil supply has been restrained as US President Donald Trump said he would not attack Iran until after the midterms.
• Tech stocks have also led a downturn, following market fears that the AI boom has surpassed a peak.

US stocks have dipped as crude oil prices surged on a spike in Middle East tensions and a cut in US output ‌that fed inflation and rate-hike fears, while semiconductor stocks slumped.

Of the major US stock indexes, the Nasdaq closed with the steepest percentage loss, two days after ‌the tech-heavy index reached a record closing high.

Chipmakers, which have soared over 80 per cent so far this year, were clear underperformers on the day following a report from the Financial Times that said OpenAI’s annualised revenues were $US20 billion less than the company previously signalled.

“The market’s going sideways in anticipation of third-quarter earnings season, which begins next week, and then there’s the ongoing conflict in Iran that’s pushing oil prices higher,” said Terry Sandven, chief equity strategist ‌at US Bank Wealth Management ‌in Minneapolis, Minnesota.

“What’s ⁠equally telling is that year-to-date, the path of least resistance for equities has been up.”

Oil prices jumped ​on supply concerns after a spate of attacks on shipping in the Strait of Hormuz, combined with a cut in US output due to hurricane activity.

Front-month WTI and Brent settled up 3.6 per cent and 4.1 per cent, respectively.

Tight global crude supplies during the Iran war have sent US crude soaring more than 60 per cent so far this year, stoking inflation pressures.

In response to those pressures, the US Federal Reserve hiked interest rates in September for the first time since July ⁠2023.

During Thursday’s session, benchmark US Treasury yields inched higher, hovering near multi-year highs, while ‌yields on two-year ​notes, which tend to reflect Fed rate expectations, moved up more decisively.

Financial markets currently expect the central bank to leave rates unchanged this month, ​while the probability ‌of a December hike is nearly 70 per cent, according to CME’s FedWatch tool.

That mirrors the expected rate hike path of the European Central Bank, ​and was affirmed by Fed Governor Christopher Waller, who said additional rate hikes will probably be necessary, but the timing of those hikes is “flexible”.

According to preliminary data, the S&P 500 lost 36.07 points, or 0.46 per cent, to end at 7,765.70 points, while the Nasdaq Composite lost ​341.59 ​points, or 1.24 per cent, to 27,197.10. The Dow Jones Industrial Average ​rose 45.68 points, or 0.09 per cent, to 51,225.48.

Memory-chip giant Samsung Electronics’ record quarterly profit ‌forecast failed to lift sentiment, with its shares closing lower in South Korea.

On Wednesday, the Wall Street Journal reported that Broadcom is lining up $US50 billion in financing for OpenAI, with Oracle also seeking an unspecified sum, spurring fears that massive debt issuance by technology companies could intensify the competition for capital.

Both Broadcom and Oracle ended the session lower.

PepsiCo shares gained after the beverage company said it would pursue additional spending cuts while lowering its annual core ​profit forecast.

Starbucks dipped following reports the coffee chain was exploring a purchase of Chipotle Mexican Grill, whose shares jumped on the ​news.

Palantir climbed after Goldman Sachs upgraded ⁠its rating on the data analytics software provider to “buy” from “neutral”.

-AAP