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Oil prices increase as Middle East disruption continues
Brent crude rises 0.7% at $96.47 a barrel
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Key Takeaways:
- Wall Street swung sharply Nov. 13 as AI stocks fell, though the S&P 500 remained on track for its first weekly gain since early October.
- Nvidia fell 4.2% after CEO Jensen Huang resigned, while rising oil prices and stubborn inflation added pressure on markets.
- Economists overwhelmingly expect the Federal Reserve to raise interest rates in December, with another increase likely in January.
NEW YORK — Stocks swung sharply in morning trading Nov. 13 as Wall Street remains on track for its first winning week since early October.
Oil prices rose a day after President Donald Trump said that the U.S. didn’t “need a deal with Iran” even as the conflict in the Middle East drags on. Brent crude, the international standard, was up 0.7% at $96.47 a barrel on Friday. It was trading near $72 per barrel in late February before the Iran war began.
Major indexes have been unsteady throughout the week as AI-focused companies pushed and pulled the market. Many of those companies have big stock values with a heavier impact on the market's gains or losses.
The S&P 500 shifted from modest moves at the opening of trading to a 1.1% drop. The index still remains on track for a weekly gain of 1.8%.
The Dow Jones Industrial Average fell 163 points, or 0.3%, as of 11:22 a.m. Eastern time. The Nasdaq composite fell 1.9%.
The market remains unsteady a day after the AI industry was rocked by the resignation of Nvidia CEO Jensen Huang. The company has been the face of the AI industry, which has been responsible for much of the gains, and big swings, on Wall Street.
Huang stepped down after his affair with a Chinese tech executive raised U.S. national security concerns. Nvidia’s longtime chief financial officer, Colette Kress, will be its interim CEO.
The AI industry's influence over Wall Street was evident again Nov. 13. More stocks within the S&P 500 were rising rather than falling, but a slump for technology stocks with a big focus on AI dragged indexes lower.
Nvidia was again among the heaviest weights and it fell 4.2%. Broadcom fell 6.5% and Advanced Micro Devices lost 10.2%.
Nvidia in particular has been slipping for weeks amid wider concerns about a potential slowdown for the industry. The big worry has been whether AI will produce enough profit to justify the costly investments and big stock values.
Outside of AI, Microsoft had a more modest 0.1% loss, despite suffering a global outage for its web services that disrupted email accounts and other applications.
Stocks in Europe and Asia were mixed.
Treasury yields were mixed in the bond market. The yield on the 10-year Treasury, which influences mortgage rates, rose to 5.13% from 5.10% late Nov. 12.
The yield on the two-year Treasury fell to 4.85% from 4.86% late Nov. 12. It closely tracks expectations for action from the Federal Reserve, which is expected to raise its benchmark interest rate at its December meeting in an effort to cool stubbornly hot inflation.
A report on Nov. 12 showed that wholesale inflation cooled a bit last month, but remains very high. The report measures inflation experienced by businesses, before it can reach consumers. Inflation at the consumer level remains stubbornly high at well above 3%. That's also much higher than the Fed's preferred target of 2%.
Rising energy prices because of the U.S. war with Iran have been fueling inflation. Household budgets are getting squeezed directly by higher gasoline costs, but pricier gas and diesel raise costs for anything that is shipped. Prices for everything from food to clothing have been rising.
The latest wholesale inflation report also shows food prices and other costs gaining ground, despite some easing for energy costs.
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“That suggests inflation is working its way into the broader economy rather than remaining concentrated in the original areas of price pressure,” said Chris Osmond, chief investment officer for Fifth Third Wealth Advisors, in a research note. “If that continues, it becomes much harder for the Fed to simply look through inflation as temporary.”
The central bank held rates steady at its last meeting, following a previous rate hike. The latest hot updates on inflation have prompted economists to overwhelmingly expect a rate hike at the upcoming December meeting, with another hike likely to follow in January.
Rate hikes by the Fed can cool inflation, but that makes borrowing more expensive and can slow economic growth.
