Oil Price Drop Sends US Stocks Soaring Amid Rate Hike Uncertainty
US stocks rallied on Thursday after oil prices fell and pressure from the bond market eased. The S&P 500 jumped 1% and was on track for its second rise in nine days, while the Dow Jones Industrial Average rose 306 points, or 0.6%, as of 9:35 a.m. Eastern time.
The price of Brent crude oil slid 3% to $102.70, down sharply from nearly $110 earlier in the week due to worries about the war with Iran and its effect on oil supplies. This helped pull yields lower in the bond market and removed some pressure on stocks.
However, the yield on the 10-year Treasury fell only slightly to 4.95% from 5.01% late Wednesday. The Federal Reserve's decision to raise interest rates for the first time in over three years and indicate at least one more increase this year still casts a shadow over the market.
Despite the challenges, some reports signaled that the US economy may be strong enough to withstand higher interest rates. Fewer US workers applied for unemployment benefits last week, and manufacturing growth in the mid-Atlantic region was stronger than expected.