Stocks climb, oil slides as tech hopes outlast Middle East worries
Market Overview and Key Drivers
By Pete Schroeder
WASHINGTON, July 9 (Reuters) - Wall Street surged on Thursday while oil prices retreated, as investors rekindled their enthusiasm for technology shares, shaking off worries about renewed military action in the Middle East.
All three major U.S. indices ended the day higher, with the Dow Jones Industrial Average climbing 0.27%, the S&P 500 rising 0.81% and the Nasdaq Composite jumping 1.3%.
The MSCI gauge of stocks across the globe was up 0.72%.
Impact of Middle East Tensions on Markets
Stocks rose despite renewed conflict in the Middle East, with the U.S. and Iran both announcing military strikes in the Gulf as their tenuous interim peace deal frayed. Oil prices, which jumped when U.S. strikes were announced on Wednesday, retreated on Thursday even though shipping activity through the critical Strait of Hormuz has once again ebbed.
U.S. crude closed down 2.3% at $71.83 a barrel, while Brent fell 2.5% to $76.05 per barrel.
Technology Sector Drives Gains
AI and Chipmaker Developments
TECH FOCUS
Global equity-market sentiment was buoyed by a report that China could allow domestic AI firms limited access to AI leader Nvidia's H200 chips, and following reports that SK Hynix's forthcoming $28 billion U.S. share listing was more than seven times oversubscribed.
The South Korean chipmaker intends to price its American Depositary Receipts at $149, raising about $26.5 billion, Reuters reported on Thursday.
Major Share Offerings
The offering, which will finance new factories and equipment to meet surging AI chip demand, is set to be the world's second-biggest share sale after SpaceX's record-breaking $85.7 billion IPO last month.
The Philadelphia SE Semiconductor index posted a second day of gains, rising 3% on Thursday.
U.S. Economic Indicators
Labor Market and Housing Data
U.S. economic data was mixed, as the number of Americans filing claims for unemployment benefits fell last week, but a separate report found home sales unexpectedly dipping as house prices hit a record high.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 215,000 for the week ended July 4, the Labor Department said on Thursday.
The National Association of Realtors found tight inventory drove up prices, underlining the affordability challenges facing many potential homeowners in the U.S. Home sales dropped 2.4% last month to a seasonally adjusted annual rate of 4.09 million units. Economists polled by Reuters had forecast home resales would climb to a rate of 4.20 million units.
Bond Yields and Currency Movements
Benchmark 10-year U.S. Treasury yields ticked lower to 4.547% after reaching a seven-week high on Wednesday.
Currency markets were relatively muted, with the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, falling 0.08% to 100.94. The pound strengthened 0.15% to $1.3406, reaching four-week highs after striking a seven-month low in late June.
Central Bank and Commodity Updates
Federal Reserve Outlook
Wednesday's June FOMC minutes, the first under new Federal Reserve Chair Kevin Warsh, had shown some growing concerns about inflation. Markets have increased the implied probability of a Fed hike this year to about 87%, according to CME FedWatch.
New York Fed President John Williams said on Thursday that he did not expect a sustained rise in energy prices for the rest of the year despite renewed Middle East conflict, but declined to say what decision he would make on interest rates at a policy meeting later this month.
Gold Market Reaction
Gold edged up 1.1% to $4,121.12 an ounce as oil prices eased. [GOL/]
(Additional reporting by Stella Qiu in Sydney and Marc Jones in London; Editing by Philippa Fletcher, Ros Russell, Tomasz Janowski and Nia Williams)
