Oil prices resume their rise, but U.S. stocks hold steadier this time around

Trader William Lawrence works on the floor of the New York Stock Exchange in in New York. (AP Photo/Richard Drew)

NEW YORK (AP) — Oil prices resumed their rise on Tuesday because of the war with Iran, but U.S. stocks held steadier this time around.

The S&P 500 rose 0.2 per cent to add to its gain from the day before, which was its biggest since the war began. The Dow Jones Industrial Average climbed 46 points, or 0.1 per cent, and the Nasdaq composite rose 0.5 per cent.

It’s a break, for now at least, from the usual playbook  since the start of the war, where stock prices have tended to go in the opposite direction of oil prices. The fear in financial markets has been that a long-term disruption to the global flow of oil  could send prices so high for so long that it damages the global economy. Not only would higher gasoline prices sap households’ budgets, it could also push companies to pass on their own higher transportation costs to customers.

On Tuesday, the price for a barrel of benchmark U.S. crude rose 2.9 per cent to settle at US$96.21. Brent crude, the international standard, climbed 3.2 per cent to US$103.42. But they pared even bigger gains from earlier in the morning, and they’re either roughly where they were at the end of last week or below.

Delta Air Lines offered an encouraging signal about the strength of the economy after raising its forecast for revenue for the first three months of 2026. It said it’s seen demand to fly accelerate into March from both businesses and households.

And that looks to be enough to offset higher prices for jet fuel because of the spike in oil prices. Delta said it still expects to report a profit for the start of 2026 that’s in line with its earlier forecast.

Delta’s stock flew 6.6 per cent higher, and it helped other airline stocks trim their own sharp losses for the year so far. United Airlines climbed 3.2 per cent, and Southwest Airlines rose 2.2 per cent.

American Airlines gained 3.5 per cent after saying it’s also likely to report stronger revenue growth for the start of this year than it had forecast earlier.

Another big winner was Uber Technologies, which drove 4.2 per cent higher after announcing an expansion of its partnership with Nvidia. They plan to launch a fleet of autonomous vehicles using Nvidia’s technology, beginning with Los Angeles and San Francisco in the first half of next year.

Some beaten-down stocks in the financial industry, meanwhile, recovered losses from earlier in the year. That includes several that got swept up in worries about whether software businesses and others potentially under threat by AI-powered competitors will pay back all their loans. Blue Owl Capital gained 4.5 per cent, and Ares Management rose 6.6 per cent.

They helped offset a 3.2 per cent drop for Cencora after the pharmaceutical sourcing and distribution services company said it’s looking for a new chief financial officer. Its current CFO, James Cleary, will retire at the end of June.

All told, the S&P 500 rose 16.71 points to 6,716.09. The Dow Jones Industrial Average added 46.85 to 46,993.26, and the Nasdaq composite gained 105.35 to 22,479.53.

The U.S. stock market has a track record of bouncing back  relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don’t stay too high for too long. Many professional investors are expecting that to be the case again, which has helped keep U.S. stock prices near their record levels.

For all its dramatic swings over the last couple weeks, including several that struck hour to hour, the S&P 500 is less than 4 per cent below its all-time high.

That’s even as Treasury yields have climbed on expectations that higher oil prices will prevent the Federal Reserve from cutting interest rates for a while. Higher yields push downward on prices for stocks and all kinds of investments.

The yield on the 10-year Treasury eased to 4.20 per cent from 4.23 per cent late Monday, but it remains well above the 3.97 per cent level it was at before the war with Iran began.

The Fed will make its next announcement on interest rates Wednesday afternoon, and traders see virtually no chance of a cut, according to data from CME Group.

Cuts to interest rates by the Fed would give the economy and job market a boost, and President Donald Trump has angrily been calling for them. But reductions would also worsen inflation.

In Australia, the central bank is actually raising interest rates. Citing higher fuel prices, the Reserve Bank of Australia made its first hike since November 2023.

In stock markets abroad, European indexes rose following a mixed finish in Asia. Indexes climbed 0.8 per cent in London and fell 0.9 per cent in Shanghai for two of the world’s bigger moves.

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Stan Choe, The Associated Press. AP Writers Matt Ott, Elaine Kurtenbach and Rod McGuirk contributed.