Oil prices rise, but not by enough to keep Wall Street from more records

NEW YORK (AP) — Oil prices rose Monday following the latest fighting to threaten the U.S.-Iran ceasefire, but Wall Street isn’t very worried, and U.S. stocks are rising toward more records.

The S&P 500 added 0.4% to its all-time high set on Friday. The Dow Jones Industrial Average was up 24 points, or less than 0.1%, with an hour remaining in trading, and the Nasdaq composite was 0.7% higher. Both are also coming off records.

A slight majority of U.S. stocks actually fell, including companies with big fuel bills hurt by higher oil prices. United Airlines lost 2.1%, and Alaska Air Group fell 3% after the price for a barrel of Brent crude oil climbed 4.2% to settle at $94.98. That clawed back a chunk of Brent's loss from last week and means it's still well above its price of roughly $70 from before the war.

Expensive oil has already sent inflation higher, which not only increases bills for households but also pushes up bond yields. High yields worldwide recently have threatened to slow economies and undercut prices for stocks and all kinds of other investments.

But yields regressed during the day as oil prices came off their highest levels. That eased some of the pressure on Wall Street, and the Russell 2000 index of the smallest U.S. stocks went from a loss of 1% back to roughly even. Small companies can feel the pinch of higher borrowing costs in particular because of the need for many to borrow to grow.

Hope also seems to remain on Wall Street that the United States and Iran will ultimately reach an agreement to reopen the Strait of Hormuz, allowing deliveries of oil to resume from the Persian Gulf and easing the upward pressure on inflation.

Strength from several market heavyweights also helped to power the market.

Nvidia was the strongest force lifting the market and rose 6.1% after CEO Jensen Huang announced several product updates at a conference. What Nvidia does matters immensely for the U.S. stock market because it’s the biggest in terms of overall market value. That means the movements for its stock carry more weight on the S&P 500 than any other’s.

And Wall Street’s biggest companies have been growing so much that they’re dominating the market. The top 10 stocks control nearly half the S&P 500’s total market value, a 40-year high, according to Thomas Carroll, equity market strategist at Stifel.

That worked well as Big Tech stocks shot higher thanks to exuberance around artificial intelligence. But it could also weigh on the index if the market’s leadership broadens, Carroll warns. Even if most stocks end up rising in such a rotation, stagnation or declines for Big Tech heavyweights could drag on S&P 500 index funds.

A key indicator Carroll follows about market breadth “is signaling a rotation is coming,” he wrote in a report.

Elsewhere on Wall Street, Science Applications International Corp. jumped 14.1% after becoming the latest U.S. company to report bigger profit for the latest quarter than analysts expected. SAIC also raised forecasts for upcoming financial results after winning several contracts from the U.S. Department of Homeland Security, army and other agencies.

A cavalcade of such profit reports has helped the U.S. stock market push to records despite the uncertainty created by the war with Iran.

Berkshire Hathaway fell 1.1% after saying it would buy homebuilder Taylor Morrison Home for $6.8 billion. It’s one of the first big acquisitions announced by the company since Greg Abel took over its leadership from famed investor Warren Buffett. Taylor Morrison Home jumped 22.3%.

MGM Resorts International leaped 17.5% after People Inc., Barry Diller's business that was formerly known as IAC, offered to buy the rest of the company it doesn't already own for $48.30 per share in cash.

In the bond market, Treasury yields rose with oil prices and after a report said growth in U.S. manufacturing accelerated by more last month than economists expected. The yield for the 10-year Treasury climbed to 4.47% from 4.45% late Friday after came off its high for the day of nearly 4.52%.

High yields have already forced the average long-term U.S. mortgage rate to its most expensive level in nine months, and they could curtail companies’ borrowing to build the AI data centers that have supported the U.S. economy’s growth recently.

In stock markets abroad, indexes fell in Europe following a stronger finish in Asia.

Tokyo's Nikkei 225 rose 0.9% to an all-time high. SoftBank Group, the investment company that focuses heavily on AI, soared 21.2% and surpassed Toyota to become Japan’s most valuable listed company.

In South Korea, the Kospi index jumped 3.7% to a record after Samsung Electronics, its biggest company, leaped 10.1%. Official data on Monday showed that South Korea’s exports surged 53% in May from a year earlier, buoyed by global demand for semiconductors.

AP Business Writers Chan Ho-him and Matt Ott contributed.