3 weeks ago
S&P 500 Slips From All-Time High; Brent Crude Climbs 5%
Think of the stock market like a place where people trade little pieces of companies.
On Monday, the overall price of the biggest pieces in the United States dipped just a tiny bit, down from its very best day ever.
At the same time, a kind of oil called Brent got more expensive because people worry that ships cannot travel through an important waterway called the Strait of Hormuz.
That waterway is like a highway for oil, and no one knows when it will open again.
When oil costs more, lots of other things can cost more too, which makes prices go up.
That worries grown-ups who try to keep prices steady.
But some companies are doing great—many big companies made a lot more money this spring than last year.
Berkshire Hathaway, the company of famous investor Warren Buffett, made more money than expected and bought more stocks.
Another company, Intel, lost some value because it might sell a lot of new stock to pay for artificial-intelligence projects.
Next week, everyone will watch a new report to see whether prices are going up more slowly, which might mean the Federal Reserve won't raise interest rates.
The S&P 500 slipped 0.1% from Friday's record, closing at 7,753.11, with the Dow down 60.95 points and the Nasdaq down 0.3%.
Brent crude jumped 5% to $87.72 a barrel on uncertainty over when the Strait of Hormuz can reopen to global oil flows.
S&P 500 earnings per share are on track to leap about 50% in the spring from a year earlier, the best growth in five years, according to FactSet.
Berkshire Hathaway beat profit expectations and invested some cash into stocks under new CEO Greg Abel; its stock rose 1.5%.
MarineMax jumped 46.1% on its $1.5 billion Blackstone sale and Varex Imaging rose 48.8% on Teledyne's $18.90-per-share offer, while Intel fell 4.1% on plans to possibly sell $15 billion of stock.
- Who
- U.S. stock investors and companies including Berkshire Hathaway, Intel, MarineMax, Varex Imaging and Teledyne Technologies, with the Federal Reserve watching upcoming inflation data.
- What
- U.S. stocks slipped from record highs while Brent crude oil jumped 5% to $87.72 on fears over the Strait of Hormuz's reopening.
- Where
- Wall Street in New York, and the Middle East around the Strait of Hormuz.
- When
- Monday trading session, ahead of Wednesday's U.S. inflation report.
- Why
- Uncertainty over when the Strait of Hormuz can reopen fueled an oil price surge, while investors weighed strong corporate profits, deal activity and a possible Federal Reserve rate hike.
Bull Case
Bear Case
Stock valuations
Bull Case
Strong profit reports make U.S. stocks look less expensive and help justify the recent rally to record highs.
Bear Case
Criticism has been high that U.S. stocks generally look too expensive after a long run-up.
Federal Reserve rate policy
Bull Case
If inflation slows, there will be less pressure on the Fed to raise interest rates, which supports stocks and the economy.
Bear Case
Traders still see a nearly 52% chance of a September rate hike; higher rates are needed to keep inflation in check even if they slow the economy.
Oil prices and Middle East supply
Bull Case
Hopes remain that the United States and Iran could reach an agreement allowing oil tankers to exit the Middle East again and ease crude prices.
Bear Case
Caution is returning over when the Strait of Hormuz can reopen, pushing Brent crude up 5% to $87.72 and stoking inflation worries.
Key facts
- S&P 500
- 7,753.11 (down 4.53 points, -0.1%)
- Dow Jones Industrial Average
- 53,975.98 (down 60.95 points)
- Nasdaq composite
- 26,605.36 (down 85.26 points, -0.3%)
- Brent crude
- $87.72 per barrel (+5%)
- Berkshire Hathaway stock
- +1.5% after stronger-than-expected profit
- Intel
- -4.1%; may sell $15 billion of stock
- Expected inflation report
- 3.4%, down from 3.5% in June
- Fed September rate-hike odds
- ~52% per CME Group










