Khaberni - American stocks are nearing a new record mark on Wednesday, after their strong rise over the past two weeks, amid increasing hopes that the global economy can sidestep the direst scenarios stemming from the US-Iran war.
According to the Associated Press, the Standard & Poor's 500 index rose by 0.4%, and was on track to surpass its highest level ever recorded in January.
After dipping about 10% from its peak in late March—a sharp decline Wall Street described as a "correction"—the index, a cornerstone of many retirement accounts, has since rebounded about 10%.
This rise is largely due to expectations of easing tensions in the war and the full resumption of oil flow to global markets through the Strait of Hormuz. These hopes remained intact on Wednesday as mediators neared extending the ceasefire between the United States and Iran, and resuming negotiations before the deal expires next week.
However, stocks could easily resume their decline if these expectations falter, which has previously happened during the war.
Oil prices fluctuated on Wednesday, reflecting ongoing caution in financial markets, while global stock indexes saw only slight movements after their significant gains in recent weeks.
The price of Brent crude oil, the international benchmark, rose 0.9% to reach $95.64. This price is still much higher than its pre-war level of about $70, although below its peak of $119 when the escalation fears were at their highest.
The Dow Jones Industrial Average fell 215 points, or 0.4%, by 12:30 PM Eastern Time, while the Nasdaq Composite Index increased by 1.1%.
But if the US-Iran negotiations succeed, the war might only be a temporary setback for the global economy, rather than transforming into a permanent reality of high oil prices and inflation. This, in turn, could allow investors to refocus on the most influential factor in stocks: corporate profits.
Despite the noise of geopolitical events, markets tend to move over the long term based on corporate earnings. This trend had supported stock markets before the outbreak of the war, while analysts anticipate continued growth for the time being.
Bank of America's stock rose by 1.3% on Wednesday after announcing earnings of $8.6 billion during the first three months of the year, up 17% compared to last year, surpassing analysts' expectations. CEO Brian Moynihan noted signs of "resilience in the American economy," including strong consumer spending.
Some companies that were previously affected by AI concerns earlier in the year have recouped some of their losses. Concerns were centered around the massive spending on developing AI technologies, in addition to the potential for some companies to fall behind in competition supported by these technologies.
This concern was reflected on private credit companies that have loaned to software companies and others exposed to artificial intelligence risks.
Shares of ServiceNow rose by 6.3%, Oracle by 4.2%, and Ares Management by 6.3%, recording some of the biggest gains in the S&P 500 on Wednesday, although they are still down between 12% and 40% since the beginning of the year.
With markets returning to January levels and higher earnings expectations for major US companies, optimists see many stocks as more attractive now than their values months ago.
Mason Mendez, an investment strategy analyst at the Wells Fargo Investment Institute, said, "We see promising investment opportunities today" in sectors like technology.
Allbirds stock jumped over 700% to exceed $20, after the company announced a strategy shift to enter the infrastructure field for AI computing, changing its name to NewBird AI. The name Allbirds will remain associated with its footwear brand, which the company agreed to sell to the American Exchange Group.
Nike's stock increased by 3.3% after CEO Elliot Hill and Nike board member and Apple CEO Tim Cook revealed a joint purchase of about 48,000 shares of the company, valued at close to one million dollars per share. Nevertheless, Nike's stocks are still down about 29% since the start of the year.
On the other hand, shares of Dutch semiconductor manufacturing equipment firm ASML fell by 5.4% on Wall Street, after delivering revenue forecasts that were on average below analysts' estimates, despite the stock rising about 36% since the beginning of the year.
In global stock markets, the performance of indices in Europe was mixed after limited gains in Asia.
In the bond market, the yield on 10-year US Treasury bonds rose to 4.28% compared to 4.26% at the end of the previous session.
