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Oil prices drop after positive company forecasts and record stock indexes

Oil prices drop after positive company forecasts and record stock indexes
Oil prices drop after positive company forecasts and record stock indexes

Oil prices continued their recent sharp declines, while major stock indexes reached record highs on Tuesday. Dow Jones, S&P 500 and pan-European STOXX 600 have all set records.

After last week's joint intervention by Tokyo and Washington, the Japanese yen fell but retained most of its gains.

Qatari and U.S. officials made comments that weighed on oil, raising hopes for a diplomatic solution to the Iran War that could improve the oil flow through the Strait of Hormuz.

U.S. State Secretary Marco Rubio stated on Tuesday that there had been progress in the talks with Iran and Oman regarding moving more ships through strait. However, a final deal has yet to be reached. Treasury Secretary Scott Bessent said earlier that a deal could be reached with Iran on Tuesday or Wednesday to reopen strait.

Brent crude futures dropped $4.41 or 5.3% to settle at $79.36 per barrel, the lowest price since July 13th. U.S. West Texas Intermediate Futures fell $4.57 or 5.7% to settle at $75.77 per barrel, a new three-week low.

Shares of Caterpillar rose as the company raised its revenue growth forecast. It benefited from the buildout of AI Data Centers. Palantir Technologies also saw a surge in its shares as the company?raised their annual revenue forecast.

Oliver Pursche is a senior vice president at Wealthspire Advisors, located in Westport, Connecticut. He said that investors are reacting "to stronger earnings and higher expectations." There's an overall sense of optimism and it's reflected.

LSEG data shows that more than 80% S&P 500 companies beat analysts' expectations in the last quarter.

Both the Dow Jones Industrial Average and S&P 500 reached new closing highs. The Dow Jones Industrial Average gained 907.47 points or 1.71% to 54,085.88. And the S&P 500 added 136.02 or 1.79% to 7,736.52. The Nasdaq Composite climbed 671.10 or 2.59% to 26,584.99.

After the closing bell shares of SpaceX fell about 7%. The company announced its first quarter results as a publicly traded company. It highlighted a 92% increase in revenue, driven by strong growth at its Starlink?satellite internet and AI businesses.

The MSCI index of global stocks rose by 14.68 points or 1.30 percent to 1,145.69. It was on track to close at an intraday high.

The pan-European STOXX 600 Index rose by 0.73%, to 656.86. This is a "record close". The index was boosted by gains in tech stocks and corporate earnings reports.

After an intervention-driven?RALLY, the Yen has eased.

After coordinated interventions by U.S. authorities and Japanese authorities last week to support the yen, the yen fell 0.38% at 157.79 dollars per yen in afternoon trading.

The Japanese currency is still stronger than the greenback, compared to levels from a week earlier. This prompted the official support of the U.S. and marked the U.S.'s first intervention on the Japanese foreign exchange markets in 15 years.

The dollar index fell 0.13% to 99.88.

As oil prices fell, traders re-priced their bets for a Federal Reserve rate hike in September.

The incoming data may provide Kevin Warsh with enough cover to not hike rates.

The yield on the 2-year note, which usually moves in line with Fed expectations of interest rates, fell 6.22 basis point to 4.194%, and reached 4,1897%, its lowest level since July 20, The yield on the benchmark U.S. 10 year notes fell by 5.72 basis points, to 4.627%. Reporting by Caroline Valetkevitch and Stefano Rebaudo in New York. Jamie Freed and Mark Potter edited by Deepa Babington, Aurora Ellis, Deepa Babington, and Aurora Ellis.

(source: Reuters)