Today's Edition
NEW YORK (REUTERS)
Stocks fell and oil prices rose on Tuesday as investors assessed the stalemate in the Iran conflict and news the United Arab Emirates was exiting OPEC, while concerns the AI boom was losing momentum weighed on equity markets.
US bond prices also slid, with yields up on concern over the effect of high energy prices on inflation.
The US-Iran conflict is at an impasse and energy and other supplies are still failing to cross the critical Strait of Hormuz.
Oil prices briefly pared gains, but Brent was last hovering near a three-week high while WTI broke through $100 per barrel for the first time since April 13.
US crude rose 3.93% to $100.16 a barrel and Brent rose to $111.13 per barrel, up 2.68% on the day.
AI In Focus
The tech-heavy Nasdaq Composite fell more than 1% as investors questioned whether the so-far-unstoppable artificial intelligence boom can continue to deliver meaningful returns for investors. The Wall Street Journal reported that heavyweight AI OpenAI had missed internal targets for weekly users and revenue, concerns raising over the ChatGPT parent's ability to support its massive spending on data centres.
The Dow Jones Industrial Average rose 9.08 points, or 0.02%, to 49,176.87, the S&P 500 fell 39.47 points, or 0.55%, to 7,134.44 and the Nasdaq Composite fell 256.03 points, or 1.03%, to 24,630.88.
Tech stocks related to OpenAI, such as Oracle, and CoreWeave, fell over 3% each. MSCI's gauge of stocks across the globe fell 8.04 points, or 0.75%, to 1,066.96.
The pan-European STOXX 600 index fell 0.37%, the emerging market stocks gauge was down 0.75% and MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.69%. Japan's Nikkei index fell 1% after a record high on Monday.
Investors are also focusing on earnings from US tech giants Microsoft, Alphabet, Amazon, Meta Platforms, and Apple that will further test the AI-driven rally.
Higher oil prices continued to weigh on inflation expectations. The 2-year Treasury note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 3.9 basis points to 3.844%, from 3.805% late on Monday.
The US greenback - against a basket of currencies including the yen and the euro - rose 0.15%. The British pound fell 0.1% against the dollar and the euro was little changed. The dollar has been one of the few safe-haven assets during the Iran conflict, although it has given up many of its March gains in the last few weeks.
The yen initially strengthened on the view that a rate hike was now in play, but was last around 0.1% lower at 159.54 per dollar.
A breach beyond the 160-per-dollar threshold hasmarkets on alert that Tokyo might step in to support its currency.
The US Federal Reserve, the Bank of England,and the European Central Bank are due to announce decisions later this week.
All are expected to keep rates unchanged but market attention will be on comments from policymakers on pricing pressure.
