Oil prices keep spurting higher, but U.S. stocks hold near their records

A train arrives at a Wall Street subway station in New York's Financial District on Nov. 5, 2024. (Peter Morgan / The Associated Press)

NEW YORK — More jumps for oil prices sent tremors through the U.S. bond market on Wednesday, along with hints that some U.S. Federal Reserve officials don’t want to cut interest rates any time soon. But fat profit reports from Starbucks and other big companies helped the U.S. stock market remain resilient despite that.

The S&P 500 finished nearly unchanged and edged down by less than 0.1 per cent, a day after slipping from its latest all-time high. The Dow Jones Industrial Average dropped 280 points, or 0.6 per cent, while the Nasdaq composite inched up by less than 0.1 per cent.

The action was more dramatic in the oil market, where the price for a barrel of Brent crude to be delivered in July jumped 5.8 per cent to settle at US$110.44 per barrel. That’s where most of the trading is happening in the Brent market, and it got as high as US$111.84 later in the afternoon.

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The highest price since the war with Iran began is US$119.50 for the most actively traded Brent contract, reached last month. On Wednesday, the price for a barrel of Brent crude for delivery in June, which is getting less trading action than July’s contract, briefly breached that mark and got above US$120.

Oil prices have jumped this week as President Donald Trump appears willing to maintain the U.S. blockade of Iranian ships, which is preventing the country from making money by selling oil. Iran, in turn, is keeping the Strait of Hormuz closed to other oil tankers hoping to carry crude to customers worldwide as long as the blockade continues.

High oil prices helped push the Federal Reserve to announce Wednesday that it’s continuing to hold off on cuts to interest rates. While lower rates could give the economy a boost, they simultaneously risk worsening inflation.

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Three Fed officials said they did not want to include anything suggesting more cuts may be coming in the central bank’s statement announcing the decision.

Treasury yields climbed in the bond market immediately afterward, adding to gains from earlier in the day due to rising oil prices. The yield on the 10-year Treasury rose to 4.41 per cent from 4.36 per cent late Tuesday.

The two-year Treasury yield, which more closely tracks expectations for Fed action, climbed more. It jumped to 3.93 per cent from 3.84 per cent, which is a notable move for the bond market.

Traders still largely expect the Fed to hold the federal funds rate steady through the end of this year, according to data from CME Group. But they eliminated nearly all their bets for a cut to rates in 2026 in favor of a small chance for a hike.

Still, the U.S. stock market held near its records as more companies joined the procession reporting stronger profit growth for the start of 2026 than analysts expected.

Visa jumped 8.3 per cent after delivering stronger results than analysts expected, and CEO Ryan McInerney said consumer spending remained resilient in the quarter.

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Starbucks climbed 8.4 per cent after likewise reporting better results than expected, while saying customers spent more at each visit, particularly at its North American stores.

But those not meeting expectations have gotten punished. GE Healthcare Technologies dropped 13.2 per cent after falling short of analysts’ forecasts. Robinhood Markets sank 13.2 per cent after reporting growth in profit that was not as strong as analysts expected.

Booking Holdings swung between losses and gains and finished with a gain of 0.3 per cent after the online travel company reported better results than analysts expected. It said the war with Iran is affecting its results and kept some potential customers from booking rooms during the quarter.

The company behind Booking.com, Priceline and other brands said it expects the conflict to continue affecting its business through the end of June. It could affect travel not only in the Middle East but also in major transit corridors, such as between Europe and Asia.

All told, the S&P 500 slipped 2.85 points to 7,135.95. The Dow Jones Industrial Average dropped 280.12 to 48,861.81, and the Nasdaq composite added 9.44 to 24,673.24.

In stock markets abroad, indexes fell in Europe following a stronger finish in Asia. Hong Kong’s Hang Seng jumped 1.7 per cent for one of the world’s strongest moves, while London’s FTSE 100 fell 1.2 per cent.

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Stan Choe, The Associated Press. AP Business Writer Chan Ho-him contributed to this report.