Oil prices climbed sharply Monday after the latest fighting threatened the U.S.-Iran ceasefire, but Wall Street did not break its stride. By 10:15 a.m. Eastern time, the Dow Jones Industrial Average was down 102 points, or 0.2%, the S&P 500 was virtually unchanged from its record close on Friday, and the Nasdaq composite was flat.
Philip Finale was on the floor of the New York Stock Exchange as traders watched the market absorb a jump in energy prices without surrendering the broader rally. Brent crude rose 6.7% to $97.22 a barrel, a move that hit fuel-sensitive names first: United Airlines fell 2.9% and Carnival dropped 2.7%. The Russell 2000 sank 1%, a reminder that smaller companies tend to feel higher borrowing costs and energy shocks faster than the biggest stocks do.
The strength in the major indexes has been built on a narrow base. Nvidia rose 4.8% after Jensen Huang announced product updates and said the company’s next-generation artificial-intelligence platform, Vera Rubin, is ramping into full production. Science Applications International Corp. jumped 12.8% after reporting bigger profit than analysts expected and lifting its outlook on the back of new federal contracts. With the top 10 stocks controlling nearly half the S&P 500’s total market value, a share that is at a 40-year high, a few large winners can keep the index aloft even when oil is pushing higher.
That is the friction point on Monday: oil is climbing fast, inflation has already been pushed higher around the world, and higher yields can still threaten stock prices and the economy. Yet investors appear willing to look past the spike for now, hopeful the United States and Iran will ultimately reach an agreement that reopens the Strait of Hormuz and eases the pressure on energy markets. The broad market is saying it is not ready to call the rally over, even if the oil tape is flashing warning signs.
The question now is not whether higher crude can hurt this market. It already is. The question is how long stocks can keep hovering near records if oil stays near $97 and the ceasefire remains fragile.
