Oil prices and bond yields give back some of last week’s jumps

U.S. stocks are climbing with markets worldwide on Monday after oil prices and yields in the bond market gave back some of their jumps from last week.

The S&P 500 rose 1.5 per cent and pulled within 0.4 per cent of its all-time high set last month. The Dow Jones Industrial Average was up 348 points, or 0.7 per cent, as of 2:20 p.m. Eastern time, and the Nasdaq composite was 2.2 per cent higher.

They got help from the price for a barrel of Brent oil falling 3.4 per cent to $100.29 USD.

While that’s still much higher than its roughly $72 price from earlier this summer, it’s down from the nearly $110 it touched last week.

1:48 New Middle East attacks threaten oil supply

Oil prices are swinging up and down as some crude from the Middle East is able to sail through the Strait of Hormuz, though nowhere nearly as much as the industry and customers would like because of the war with Iran.

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Morgan Stanley’s Michael Wilson said another leg higher in prices for oil, gasoline and other refined products is the main risk he sees in the near term that could keep the U.S. stock market from rising to his forecasted target for the year’s end.

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The average price for a gallon of regular gasoline across the United States has already climbed to nearly $4.48 USD, according to AAA. That’s up from less than $4.32 USD just a week earlier and from $3.18 USD a year ago.

Monday’s pullback in oil prices helped lower the pressure coming from the bond market.

1:46 Alberta drivers see $1.80 price at the gas pump

The yield on the 10-year Treasury eased to 4.97 per cent from 5.01 per cent late Friday after it crossed above the five per cent threshold last week for the first time in three years.

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Yields have been on the rise because of worries about inflation, big debt loads for governments worldwide and other factors. That hurts the economy because high yields make it more expensive not only for the U.S. government to borrow money to pay its bills but also for households and businesses.

Worries remain about how much oil is available for customers worldwide, ING commodities strategists Ewa Manthey and Warren Patterson wrote in a commentary on Monday.

However, they said profit-taking by investors after the recent jump in oil prices, together with hopes for constructive discussions at this week’s UN General Assembly and at a meeting between China’s and the United States’ leaders, helped improve optimism.

U.S. Treasury Secretary Scott Bessent told reporters following talks Sunday with Chinese Vice Premier He Lifeng in New York that the U.S. had “a very successful engagement” with the Chinese side. Bessent said talks with China touched on trade and AI. China and the United States have been discussing reciprocal tariff reductions on $30 billion worth of goods from each side.
In Beijing, China’s Foreign Ministry on Monday confirmed that Xi Jinping will pay a state visit to the United States between Sept. 23 and 25. Experts and policymakers believe trade, tariffs, and AI safety are likely among the topics to be on the agenda. The war in Iran and developments in the Middle East and ties between China and Iran could also be discussed.

On Wall Street, stocks in the artificial-intelligence industry continued to stabilize following their worldwide slide at the start of last week. Leaders of the AI industry have recently warned a slowdown is needed in the industry’s development for the safety of humanity.

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Stocks enmeshed in the cryptocurrency industry, meanwhile, rallied after bitcoin’s price rose back above $85,000 and returned to where it was in January.

Stock indexes around the world also climbed thanks to the easing of oil prices and bond yields.

Indexes gained 0.9 per cent in France, 1.2 per cent in Hong Kong and 1.6 per cent in South Korea.