A fall in oil prices offered some relief to Wall Street on Friday, but was not enough to reverse the week’s broader losses. Investors continued to weigh the impact of the Middle East conflict, fresh US tariffs and uncertainty over the Federal Reserve’s next policy move.S&P 500 rose 40.73 points, or 0.55%, to 7,449.03, while Dow Jones Industrial Average climbed 338.81 points, or 0.66%, to 52,050.46 around 9 pm IST. Nasdaq Composite edged up 0.94 point to 25,138.64, remaining broadly flat on the day. Despite Friday’s gains, the benchmark indices were still heading towards weekly declines as investors continued to assess geopolitical tensions, tariffs and the outlook for interest rates.
Oil pullback eases pressure
After climbing throughout the week, Brent crude retreated 3.5% to $97.19 a barrel. The international benchmark had climbed back above $100 on Thursday before giving up some gains. Prior to the Iran war beginning in late February, Brent had been trading at about $72 a barrel.The decline in oil prices also coincided with a modest fall in US Treasury yields. The yield on the benchmark 10-year Treasury note eased to 4.67% from 4.71% at Thursday’s close, offering some support to equities.Elsewhere, European markets traded higher, while Asian markets finished the day in negative territory.Losses in a handful of heavyweight technology companies kept a lid on broader market gains.Micron Technology tumbled 6%, while Broadcom declined 2.3%. Their sharp falls weighed heavily on the Nasdaq because of their large market values and also curbed advances in the S&P 500, despite the index having more rising stocks than falling ones.
Tariffs, inflation and rate outlook in focus
Investor attention also remained fixed on the US administration’s latest tariff measures, which extend to nearly all imported goods entering the country. The tariffs are paid by importers, who typically pass the higher costs on to consumers.The measures were introduced as temporary levies imposed by the president approached their Friday deadline following a Supreme Court setback for earlier tariffs.The combination of higher energy costs and fresh tariffs has added to inflation concerns, a key consideration for the Federal Reserve as it prepares for its next policy meeting later this month.Earlier expectations of an interest rate cut have faded, with markets now leaning towards another increase. According to CME FedWatch, traders expect one rate hike before the end of the year, with nearly a 36% probability that it could come at next week’s meeting.Higher fuel costs are also expected to put additional strain on household budgets. AAA said the national average price of gasoline stood at $4.10 per gallon. Although that is below the levels seen during the expansion of the Iran conflict earlier this spring, it is almost a dollar higher than the price recorded at the same time last year.
Earnings and AI spending remain under watch
Beyond macroeconomic concerns, investors are also scrutinising whether companies can continue delivering earnings growth strong enough to support current valuations.American Express fell 6% even after reporting higher quarterly profit. The company maintained its full-year profit outlook while continuing to spend more heavily to retain affluent customers amid intensifying competition.Investors are also becoming more cautious about the heavy spending by AI-focused companies. Firms such as Alphabet and Nvidia continue to invest aggressively in artificial intelligence, but questions are growing over whether those investments will generate sufficient profits to support the high valuations that have driven the market’s gains this year.
