Wall Street edges toward all-time high on strong earnings and falling oil prices

The U.S. stock market is nearing an all-time high, with the S&P 500 up 0.8% and poised to surpass its August record. Despite concerns over war, inflation, and rising bond yields, the index has surged nearly 24% since its March low. The Dow Jones Industrial Average gained 343 points, or 0.7%, while the Nasdaq composite added 0.8% to its own record set the day before. Investors are feeling slightly more optimistic about their finances, even as rising living costs weigh on consumers.

Many of the fears that triggered the market’s March downturn, such as the war with Iran, have materialized. Oil prices have risen, worsening inflation and pushing bond yields higher worldwide. This has made borrowing more expensive and reduced investor willingness to pay high stock prices. However, U.S. companies continue to report strong profits, providing critical support to the market. Lamb Weston, a frozen food producer, saw its stock rise 11.9% after beating earnings expectations and raising its full-year profit forecast.

Analysts expect S&P 500 companies to report nearly 30% earnings growth for the third quarter, marking the third straight quarter of over 25% growth. Profitability remains a key driver of stock prices alongside interest rates. Delta Air Lines and major banks are set to release earnings soon. Stocks also got a boost as Brent crude oil prices dropped 1.1% to $99.19 per barrel, easing inflation pressures. The 10-year Treasury yield fell to 5.26% from 5.31%.

AI-related stocks have led the market’s rally, with Constellation Energy jumping 14% after securing a deal to supply Google with electricity. The AI boom has increased demand for energy, construction, and materials. Option Care Health surged 32.9% after being acquired by CD&R and McKesson for $5.8 billion. Internationally, European indexes rose slightly, while Asian markets showed mixed results.