U.S. stocks rose early Friday on Wall Street as a spike in crude oil prices caused by the war with Iran eased and traders sized up new data on consumer spending and the economy.
The S&P 500 was up 0.7%. The Dow Jones Industrial Average was up 304 points, or 0.6%, as of 10:01 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.
The gains mark a stark change from the heavy turbulence in that gripped the market earlier in the week. The major indexes are still on pace for their third straight losing week.
In the energy market, which has been roiled by the Iran war and its impact on supplies of crude oil and gas, the price of a barrel of Brent crude, the international standard, was down 1% to $99.50 after settling at $100.46 on Thursday. It’s still up more than 36% for the month.
U.S. crude oil was down 1.6% to $94.11 a day after settling at $95.73 per barrel. It’s up around 40% this month.
Oil prices have been volatile since the Iran war began. Iran’s actions have effectively stopped cargo traffic through the narrow Strait of Hormuz, where a fifth of the world’s oil typically sails. That has oil producers cutting production because their crude has nowhere to go.
If the war continues to hamper the production and transportation of oil from the Persian Gulf, it could cause a surge in inflation that could hurt the global economy. Analysts have said that if the Strait of Hormuz remains closed, oil prices could jump to $150 relatively quickly.
While the International Energy Agency said Wednesday its members would make a record 400 million barrels of oil available from their emergency reserves, some economists believe that would do little to reassure markets.
President Donald Trump signaled earlier this week that he would take more action to address the squeeze on oil flows. The move follows the administration’s decision to grant temporary permission for India to buy Russian oil.
A new snapshot of consumer spending Friday shows inflation crept higher in January, even before the Iran war caused oil and gas prices to spike.
The Commerce Department said prices rose 2.8% in January compared with a year earlier. But excluding the volatile food and energy categories — which the Federal Reserve pays closer attention to — core prices rose 3.1%, up from 3% in the prior month and the highest in nearly two years.
Wall Street also got an update on how U.S. economic growth fared in the October-December quarter. The economy, hobbled by last fall’s 43-day government shutdown, grew at a sluggish 0.7% annual rate, a downgrade from its initial estimate last month.
In the bond market, the yield on the 10-year Treasury fell to 4.24% from 4.26% late Thursday. It was just 3.97% before the war started.
Higher yields help make all kinds of borrowing more expensive, such as mortgages for potential U.S. homebuyers and bond offerings for companies looking to expand. They also push down on prices for all kinds of investments, from stocks to crypto.
In stock markets abroad, indexes rose in Europe after also falling in Asia.
In early European trading, Britain’s FTSE 100 rose 0.5%, Germany’s DAX added 0.7% and France’s CAC 40 gained 0.4%.
Tokyo’s Nikkei 225 index slipped 1.2%. Technology-related stocks saw some of the bigger losses, with SoftBank Group falling 4.5%.
Source: AP