Oil settles up, biggest weekly gains in over a year on Middle East war risk

NEW YORK – Oil prices rose on Friday and settled with their biggest weekly gains in over a year on the mounting threat of a region-wide war in the Middle East, although gains were limited as US President Joe Biden discouraged Israel from targeting Iranian oil facilities.

Brent crude futures rose 43 cents, or 0.6%, to settle at USD 78.05 per barrel, while US West Texas Intermediate crude futures gained 67 cents, or 0.9%, to close at USD 74.38 per barrel.

Israel has sworn to strike Iran for launching a barrage of missiles at Israel on Tuesday after Israel assassinated the leader of Iran-backed Hezbollah a week ago. The events had oil analysts warning clients of the potential ramifications of a broader war in the Middle East.

Oil prices jumped nearly 2% during the session but pulled back sharply after Biden said that if he were in Israel’s shoes he would consider alternatives to striking Iranian oil fields.

On Thursday, oil benchmarks surged over 5% after Biden confirmed the US was in talks with Israel over whether it would support a strike on Iranian energy infrastructure.

On a weekly basis, Brent crude gained over 8%, the most in a week since January 2023. WTI gained 9.1% week-over-week, the most since March 2023.

An attack on Iranian energy facilities would not be Israel’s preferred course of action, JPMorgan commodities analysts wrote on Friday. Still, low levels of global oil inventories suggest that prices are set to be elevated until the conflict is resolved, they added.

Citing data from ship-tracking service Kpler, they said that inventories are below last year’s levels when Brent was trading at USD 92 and at 4.4 billion barrels the lowest on record.

Brokerage StoneX forecasts oil prices could jump between USD 3 and USD 5 per barrel if Iranian oil infrastructure is targeted.

On Friday, Iran’s Supreme Leader Ayatollah Ali Khamenei appeared in public for the first time since his country launched the missile attack. He called for more anti-Israel struggle.

Iran will target Israeli energy and gas installations if Israel attacks it, the semi-official Iranian news agency SNN quoted Revolutionary Guards deputy commander Ali Fadavi as saying.

Iran is a member of OPEC+ with production of around 3.2 million barrels per day or 3% of global output. The group’s spare production capacity should allow other members to boost output if Iranian supplies are disrupted, limiting oil price gains, Rystad analysts said on Thursday.

Supply fears have also eased in Libya. The country’s eastern-based government and Tripoli-based National Oil Corp on Thursday said all oilfields and export terminals were being reopened after a dispute over leadership of the central bank was resolved.

(Reporting by Shariq Khan in New York, Ahmad Ghaddar in London, and Arunima Kumar in Bengaluru; Additional reporting by Gabrielle Ng in Singapore; Editing by Kirsten Donovan and David Gregorio)

Stocks edge lower as Middle East conflict pushes oil higher

NEW YORK/LONDON – Global stocks fell on Thursday, weighed by tepid trading in equity markets across the US and other major regions, while oil prices jumped, buoyed by rising geopolitical tension from the Middle East conflict.

Wall Street’s main indexes finished lower after trading slightly higher early in the session. Data released on Thursday showed rising US jobless claims, indicating labor market softness, but strong service-sector activity. The closely watched nonfarm payrolls report for September is due on Friday.

The Dow Jones Industrial Average fell 0.44% to 42,011.59, the S&P 500 fell 0.17% to 5,699.94 and the Nasdaq Composite fell 0.04% to 17,918.48.

European stocks finished down 0.93% as investors digested weak business activity survey data from the bloc. MSCI’s gauge of stocks across the globe fell 0.39% to 842.18.

Asia-Pacific shares outside Japan had earlier shed 1.3% overnight, largely driven by Hong Kong stocks .HSI sagging after a sizzling rally, with several markets, including mainland China and South Korea, closed for the day.

Japan’s Nikkei, however, ended up nearly 2% after the country’s newly elected prime minister Shigeru Ishiba said it was not the time to raise interest rates after meeting with Bank of Japan Governor Kazuo Ueda.

Israel bombed Beirut early on Thursday following a year of clashes with Iran-backed Hezbollah. Asked if he would support Israel striking Iran’s oil facilities, US President Joe Biden told reporters on Thursday “we’re discussing that.” He added: “There is nothing going to happen today.”

Brent crude futures settled up 5.03% at USD 77.62 a barrel. US West Texas Intermediate (WTI) crude futures settled up 5.15% to USD 73.71.

“The fact that energy is up where everything else is down pretty significantly is an indication that today’s move is a lot about the escalating conflict in the Middle East,” said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California.

“There’s probably some trepidation or maybe some hesitation about putting money to work ahead of tomorrow’s jobs report.”

Gold prices were flat as the US dollar strengthened against major currencies. Spot gold fell 0.01% to USD 2,657.24 an ounce, while US gold futures GCcv1 settled 0.4% higher at USD 2,679.2.

In currencies, the US dollar index rose to a six-week high, reaching 102.09, the highest since Aug. 19. It last rose 0.33% to 101.98. The euro was slightly down at USD 1.1026, and not far from Wednesday’s low of USD 1.10325, a level last seen on Sept. 12.

Sterling weakened 1.1% to USD 1.3122 after Bank of England Governor Andrew Bailey told the Guardian newspaper that the central bank could become a “bit more aggressive” on rate cuts if inflation continued to ease. Against the Japanese yen JPY=EBS, the dollar strengthened 0.1% to 146.61.

Treasury yields rose after the jobless claims data and service sector report. Two-year Treasury yields were last up at 3.7095% on Thursday, while benchmark 10-year yields were last up at 3.853%.

Markets imply a 35% chance the Fed will cut interest rates by another 50 basis points in November, compared with almost 60% last week, and have around 70 basis points of easing priced in by year-end.

“There are some uncertainties as it relates to the US election and in our near term there’s some volatility as it relates to the Middle East and what’s happening there,” said Arun Daniel, portfolio manager at American Century Investments. “People are cautious. But from a long-term perspective, we’re positive.”

(Reporting by Iain Withers in London and Chibuike Oguh in New York; Editing by Peter Graff, Matthew Lewis and Jamie Freed)

Indexes end lower ahead of US jobs data, Middle East still in focus

NEW YORK – US stocks finished lower on Thursday ahead of Friday’s monthly US payrolls report and as investors kept a watchful eye on the growing conflict in the Middle East.

Data on Thursday showed that the number of Americans filing new applications for unemployment benefits rose marginally last week, while Hurricane Helene and strikes at ports could distort the labor market picture in the near term.

Friday’s jobs report for September is considered key for the outlook for US interest rates. Economists polled by Reuters expect 140,000 job additions, while the unemployment rate is anticipated to stay steady at 4.2%.

Investors are eager for more data on the labor market after the Federal Reserve last month cut its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020.

“It looks like investors are cautious ahead of the jobs report tomorrow,” said Adam Sarhan, chief executive of 50 Park Investments in New York.

Also, he said, “it’s normal to see some profit-taking after a big rally like we’ve had over the last two, three weeks.”

The Cboe Volatility index, Wall Street’s fear gauge, rose to 20.49, its highest closing level since Sept. 6.

Israel’s military told residents of more than 20 towns in south Lebanon to evacuate their homes immediately on Thursday.

The Dow Jones Industrial Average fell 184.93 points, or 0.44%, to 42,011.59, the S&P 500 lost 9.58 points, or 0.17%, to 5,699.96 and the Nasdaq Composite eased 6.65 points, or 0.04%, to 17,918.48.

The S&P 500 remains up 19.5% for the year so far.

Traders are now pricing in a 35% probability of a 50 basis point cut next month, down from 49% a week ago, the CME Group’s FedWatch Tool shows.

The benchmark index briefly turned positive after the Institute for Supply Management survey showed US service sector activity jumped to a one-and-a-half-year high in September, further evidence that the economy stayed robust in the third quarter.

“Once again, services is doing the heavy lifting keeping this economy humming along,” said Brian Jacobsen, chief economist at Annex Wealth Management.

But also, he said, “oil prices have moved higher and the port strike can really throw a monkey wrench in things.”

Energy shares gained along with a surge in oil prices as concerns mount over a widening regional conflict in the Middle East that could pose a threat to global crude flows. The S&P 500 energy index rose 1.6%.

A workers’ strike on the East and Gulf coasts entered its third day. Morgan Stanley economists said a prolonged stoppage could raise consumer prices, with food prices likely to react first.

Constellation Brands shares fell 4.7% after the beer maker maintained its sales and profit forecast for fiscal year 2025.

Results from some of the big US banks are expected to unofficially kick off third-quarter S&P 500 earnings at the end of next week.

Declining issues outnumbered advancing ones on the NYSE by a 2.13-to-1 ratio; on Nasdaq, a 1.99-to-1 ratio favored decliners.

The S&P 500 posted 25 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 63 new highs and 114 new lows.

Volume on US exchanges was 11.01 billion shares, compared with the 12.08 billion average for the full session over the last 20 trading days.

(Additional reporting by Johann M Cherian and Purvi Agarwal in Bengaluru and Chuck Mikolajczak in New York; Editing by Pooja Desai)

China stimulus draws investors back to offshore bonds of troubled property sector

HONG KONG – Some Chinese and global institutional investors are revisiting Chinese property bonds, betting on an improvement in outlook as the government accelerates efforts to boost economic growth and revive a property sector in the throes of a debt crisis.

Investors began returning after the announcement on Tuesday of the most aggressive stimulus measures since the pandemic, mostly targeting the property sector and triggering a rally in the offshore bonds of property developers.

Credit investment specialist Beijing G Capital Private Fund Management Center placed orders worth “a few dozens of millions of yuan” to buy property bonds for the first time in several months, said its chairman, Li Gen.

“We saw determination to revive the property sector … which is a sea change” from efforts of recent years, said Li.

The rally underscores the extent to which the stimulus is restoring confidence in the sector, though analysts are split on prospects for revival in the near term.

The sector, a pillar of the world’s second-largest economy, has lurched from one crisis to another since 2021 after a regulatory crackdown on debt-fuelled construction spooked investors and lenders alike, squeezing access to funds.

Sales slowed and many developers defaulted on repayment obligations, pushing the value of developers’ US dollar-denominated bonds to historic lows.

The bonds of leading developers which did not default – including China Vanke 000002.SZ, 2202.HK and Longfor Group 0960.HK – have been among the rally’s biggest gainers.

Vanke dollar bonds maturing in November 2027 rose as far as 70 cents against the dollar as of Thursday from 49 cents before Tuesday’s announcement, Duration Finance data showed.

Longfor dollar bonds due April 2027 reached 84 cents from 75 cents over the same time frame, the data showed.

Offshore bonds of developers that defaulted also perked up, with Country Garden’s 2007.HK dollar bonds due September adding around 2 cents to trade at around 9.1 cents.

The prices of property shares have also rallied since the announcement.

‘POSITIVE STANCE’

Investor sentiment received a further boost two days after the stimulus announcement when China’s leaders pledged to meet the 2024 economic growth target of roughly 5% and “stop decline” in the housing market.

On Sunday, Guangzhou became the first top-tier city to lift all curbs on home purchases, while Shanghai and Shenzhen said they would lower the minimum down payment ratio for first home buyers and make purchases by non-local buyers easier.

Enhanced Investment Products, a USD 400 million Hong Kong-based hedge fund, has been increasing its holdings of Vanke 2027 dollar bonds, said Chief Investment Officer Jason Jiang.

“While the stock rebound could be more significant, buying Vanke bonds provides a better safety margin,” Jiang said.

A trigger for where the market will go next might be home sales data due for release after China’s week-long Golden Week holiday which ends on Oct. 7, Jiang said.

Another Hong Kong-based credit fund manager said property bonds made up as much as 20% of their portfolio having stocked up before announcement thinking them over-sold.

It has been cashing out since due to uncertainty about whether the measures could lift new home sales enough to revive the sector in the near term, said the manager, declining to be identified as they were not authorised to speak to the media.

Distressed debt hedge fund Gramercy Funds Management, based in Greenwich in Connecticut, US, has a portfolio of bonds of defaulted developers, betting on a sector revival. The rally has boosted returns and improving macro and sector fundamentals will boost them further, said Deputy CIO Philip Meier.

“The latest actions by the Chinese authorities underpin our positive stance and substantially de-risk the case for owning these bonds,” said Meier.

(Reporting by Xie Yu and Summer Zhen; Editing by Sumeet Chatterjee and Christopher Cushing)

OPEC+ still has an Asia dilemma as crude imports remain soft: Russell

LONDON – The OPEC+ group of crude oil exporters is still planning on lifting output from December, but it will be doing so against a backdrop of weak demand in the top-importing region of Asia.

Asia’s imports of crude were 27.05 million barrels per day (bpd) in September, up marginally from August’s 26.47 million bpd, according to data compiled by LSEG Oil Research.

The largely steady outcome for September arrivals was the result of region heavyweights China and India cancelling each other out.

China, the world’s biggest oil importer, saw arrivals of 11.43 million bpd in September, down from August’s 11.61 million bpd, while India’s imports were 4.94 million bpd, up from 4.71 million.

However, the more important numbers for the oil market are the year to date figures, which show Asia’s imports were 26.7 million bpd in the first nine months of the year, down 200,000 bpd from the 26.9 million bpd for the same period in 2023.

Asia accounts for about two-thirds of global seaborne crude imports, and it’s this market that tends to drive the price benchmarks such as Brent futures.

Asia’s lower oil imports for the first three quarters of 2024 undermine the forecasts for global demand growth made by the Organization of the Petroleum Exporting Countries.

OPEC’s September monthly report forecast that global demand growth in 2024 will be 2.03 million bpd, a slight 80,000 bpd reduction from its previous forecast.

But much of the forecast relies on Asia, with OPEC expecting China’s demand to rise 650,000 bpd, India by 270,000 bpd and the rest of Asia by 350,000 bpd.

The volumes tracked by LSEG show that import growth in Asia is nowhere close to meeting the OPEC forecast.

Of course, crude imports are only one aspect of total demand growth, albeit the most important. Others include domestic oil production, inventory movements and net imports of refined products.

But even if these factors are positive for overall demand growth in Asia, they are very unlikely to be enough to offset the visible weakness in the region’s crude imports.

PRICE BOOST FOR DEMAND?

There is some hope that Asia’s crude imports may increase toward the end of the year, as volumes tend to respond to lower prices, once adjusting for a lag of up to two months to account for when cargoes are arranged and physically delivered.

Global benchmark Brent futures trended weaker since mid-July, falling from a high in that month of USD 87.95 a barrel on July 5 to a low of USD 68.68 on Sept. 10.

That 22% decline may well be enough to spark renewed buying interest, especially by Chinese refiners, who have a track record of boosting imports when prices weaken, but cutting back when they rise.

It’s also possible that imports will rise in other top buyers such as Japan and South Korea as refiners ramp up output ahead of peak winter demand.

But even with a recovery in the fourth quarter, it’s still likely that Asia’s import growth in 2024 will fall short of expectations.

This means that OPEC+, which brings together OPEC and allies including Russia, will be increasing production at a time when demand growth is still uncertain.

The group held an online joint ministerial monitoring committee meeting on Wednesday, meeting market expectations for no change in policy.

This puts OPEC+ on track to ease its output cuts by 180,000 bpd from December, the group having postponed its earlier plan to raise production from October onwards.

Of course, OPEC+ retains the option to delay any increase to production further, but doing so risks ceding even more market share to producers outside the group, such as those in both North and South America.

In addition to uncertainty over what OPEC+ will ultimately decide, the crude market is grappling with the risks of a wider conflict in the Middle East, including the possibility that Israel may target Iran’s oil infrastructure in retaliation for Tehran’s missile barrage this week.

The tensions have resulted in a premium being once again priced into crude, with Brent rising to a one-month of USD 76.14 during Wednesday’s trade.

This premium is likely to persist until there is some de-escalation in the Middle East, and if that does occur, then it’s likely the market will once again focus on the broader demand concerns.

(Reporting by Clyde Russell; Editing by Elaine Hardcastle)

Oil’s shadow over world markets darkens

What comes down must go up.

And so it is with oil, whose rise on escalating fears over a deepening conflict in the Middle East is casting an increasingly dark shadow over world markets as the week draws to a close.

Brent crude leaped more than 5% on Thursday for its biggest rise in a year, bringing the week-to-date gains to more than 8%. If oil holds steady on Friday, it will clock its biggest weekly rise since January last year.

It’s true that oil’s rebound is coming from a low base and prices are back to where they were only a month ago, but world stocks and investors’ risk appetite are beginning to feel the heat.

The oil price is still around 10% lower than it was a year ago and has been negative on a year-on-year basis since July, a dynamic that has highlighted the mounting disinflationary pressures around the world.

But it was down nearly 30% year-on-year only a few weeks ago. If geopolitical tensions persist and oil continues to rise, investors may need to rethink their inflation outlooks.

US Treasury yields are rising and the yield curve is steepening, led by the long end, which suggests longer-term inflation worries may be creeping into investors’ minds.

For Asia, the tailwinds from China’s stimulus bonanza last week appear to be fading in the face of growing headwinds from oil and risk aversion.

Another notable consequence of escalating geopolitical tensions is the burst of safe-haven demand for the US dollar. The dollar index on Thursday hit a six-week high, and is on track for its biggest weekly rise since April.

Put the two together – higher Treasury yields and a stronger dollar – and it’s not a particularly attractive backdrop for Asian markets. Especially on a Friday, a day after the MSCI Asia ex-Japan index hit its highest level since January 2022.

The Asian economic calendar on Friday is fairly light, with consumer inflation from the Philippines, retail sales data from Singapore, services purchasing managers index, and manufacturing PMI reports from India and Hong Kong, respectively, as the main releases.

Global events are likely to set the market tone on Friday.

Investors in Asia may also be of a mind to play it safe ahead of the US non-farm payrolls report for September out of Washington on Friday morning. This and the October data will go a long way to determining the size of the expected interest rate cut in early November.

Rates futures market pricing is currently evenly split over a 25- or 50-basis-point cut.

Here are key developments that could provide more direction to Asian markets on Friday:

– Philippines inflation (September)

– India services PMI (September)

– Singapore retail sales (August)

(Reporting by Jamie McGeever; Editing by Bill Berkrot)

Dollar hits one-month peak to yen as Fed seen taking time with rate cuts

TOKYO – The dollar rose to a one-month high versus the yen on Thursday as robustness in the US jobs market backed the idea that the Federal Reserve does not need to rush to cut interest rates.

The yen came under strong selling pressure on Wednesday after Japan’s new prime minister said the country is not ready for additional rate hikes, following a meeting with the central bank governor.

The euro languished not far from a three-week trough reached in the previous session, after normally hawkish European Central Bank policymaker Isabel Schnabel took a dovish tone on inflation, cementing bets for a rate cut this month.

The safe-haven US currency saw some additional demand on Wednesday after Iran launched a salvo of some 180 ballistic missiles into Israel, spurring a vow of retaliation and stoking worries of all-out war.

The dollar index, which measures the currency against the euro, yen, and four other top rivals, ticked up to 101.70 as of 0023 GMT, a three-week high, extending a 0.45% climb from the previous session.

Private US payrolls increased by a larger-than-expected 143,000 jobs last month, the ADP National Employment Report showed on Wednesday, raising expectations for a strong reading for potentially crucial monthly non-farm payrolls figures on Friday.

Currently, traders lay 34.6% odds of another 50 basis-point US rate cut on Nov. 7, after the Fed kicked off its easing cycle with a super-sized reduction last month. That’s down from 36.8% odds a day earlier, and 57.4% odds a week ago, according to the CME Group’s FedWatch Tool, but still seems too high, according to Ray Attrill, head of FX strategy at National Australia Bank.

Although the ADP report is often a poor predictor of the non-farm payrolls number, Wednesday’s data “does reduce the odds of an outsized downside miss on payrolls,” Attrill said.

“I do think that if the payrolls report overall is not too shabby tomorrow night, then we will see that pricing (for a 50 basis-point cut) coming in quite significantly.”

The dollar added 0.09% to 146.575 yen after earlier reaching 146.885 for the first time since Sept. 3.

Dovish Bank of Japan policymaker Asahi Noguchi, who dissented against the rate hike in July, will give a speech later in the day.

The euro was little changed at USD 1.10455, sitting not far from Wednesday’s low of USD 1.10325, a level last seen on Sept. 12.

Sterling was steady at USD 1.3261.

The Australian dollar was flat at USD 0.6884.

Risk-sensitive currencies were sold off on Wednesday in the initial knee-jerk reaction to Iran’s offensive, but there has been little sign of retaliation by Israel as yet, allowing traders to recover their poise.

“Markets are inherently bad at trying to price tail risk,” said National Australia Bank’s Attrill.

“Those events are things that markets deal with as and when” they happen, he said. “Markets are aware of it, but they’re sticking to their knitting I think, which is focusing on economic fundamentals.”

(Reporting by Kevin Buckland; Editing by Jamie Freed)

Oil rises as Middle East conflict deepens, gains capped by global supply outlook

Oil prices ticked higher in early trade on Thursday as investors weighed the escalating conflict in the Middle East and the potential for disruption to crude flows, against an amply-supplied global market.

Brent crude futures increased 64 cents, or 0.87%, to USD 74.54 a barrel as of 0006 GMT. US West Texas Intermediate crude futures gained 72 cents, or 1.03%, to USD 70.82 a barrel.

An Israeli strike on central Beirut’s Bachoura neighborhood early on Thursday left two killed and 11 wounded, the Lebanese health ministry said in a statement.

Iran was drawn into the conflict on Tuesday after it fired more than 180 ballistic missiles at Israel in an escalation of hostilities, which have seeped out of Israel and Palestine into Lebanon and further east.

But an unexpected build in US crude inventories on Wednesday helped ease some supply concerns and curbed oil price gains.

US crude inventories rose by 3.9 million barrels to 417 million barrels in the week ended Sept. 27, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 1.3 million-barrel draw.

“Swelling US inventories added evidence that the market is well supplied and can withstand any disruptions,” ANZ analysts said in a note.

Some investors remained unfazed as global crude supplies have yet to be disrupted by unrest in the key producing region, and spare OPEC capacity tempered worries.

“After Iran’s attack, prices may stay elevated or remain more volatile for a little longer, but there’s enough production, there’s enough supply in the world,” chief executive officer of East Daley Analytics, Jim Simpson told Reuters.

OPEC has enough spare oil capacity to compensate for a full loss of Iranian supply if Israel knocks out that country’s facilities.

However, traders worry that the producer group would struggle if Iran retaliates by hitting installations of its Gulf neighbors.

“The effectively available spare capacity might be much lower if renewed attacks on energy infrastructure on countries in the region happen,” said Giovanni Staunovo, analyst at UBS.

(Reporting by Georgina McCartney in Houston; Editing by Shri Navaratnam)

S&P 500 ends near flat as more jobs data awaited; eyes on Middle East

NEW YORK – The S&P 500 ended little changed on Wednesday, with technology shares gaining but investors nervous about Middle East tensions and more US labor data due this week.

Nvidia shares rose 1.6%, helping to lift the S&P 500 technology index. However, Tesla shares fell 3.5% after the electric carmaker reported third-quarter vehicle deliveries below estimates.

Investors monitored Mideast news after Israel and the US vowed to strike back following Iran’s attack on Israel on Tuesday. US President Joe Biden said on Wednesday he would not support any Israeli strike on Iran’s nuclear sites in response to its missile attack and urged Israel to act “proportionally.”

Data released early on Wednesday showed US private payrolls increased more than expected in September, further evidence that the labor market is not deteriorating. Investors remained focused on September non-farm payrolls data due on Friday, while US jobless claims data is due Thursday.

“We have the jobs report Friday, and then earnings season starts at the end of next week,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

“We’re near all-time highs, and we know we have a friendly Fed out there. Before they push stocks to another round of new highs, investors want to hear some positive commentary from companies. People like that the Fed is very dovish and they are just waiting for another reason to push prices higher.”

The Dow Jones Industrial Average rose 39.55 points, or 0.09%, to 42,196.52. The S&P 500 gained 0.79 points, or 0.01%, at 5,709.54 and the Nasdaq Composite edged up 14.76 points, or 0.08%, to 17,925.12.

The market ended September with strong gains after the Federal Reserve kicked off its monetary policy easing cycle with an unusual 50-basis-point rate cut to shore up the jobs market. The S&P 500 is up 19.7% for the year so far.

Odds of a quarter-percentage-point rate reduction at the Fed’s November meeting are at 65.7%, up from 42.6% a week ago, the CME Group’s FedWatch Tool showed.

JPMorgan Chase and other big banks will kick off S&P 500 third-quarter earnings season on Oct. 11.

A strike by 45,000 dockworkers halting shipments at US East Coast and Gulf Coast ports entered its second day on Wednesday with no negotiations scheduled between the two sides, sources told Reuters.

The dockworkers’ strike is costing the economy roughly USD 5 billion per day, JPMorgan analysts estimated.

Among declining shares, Nike dropped 6.8% after the athletic footwear and apparel maker withdrew its annual revenue forecast just as a new chief executive is set to take charge.

Shares of Humana Inc fell 11.8% after the health insurer said it expected enrollment in its top-rated Medicare Advantage plans for those aged 65 and above to decrease for 2025.

Declining issues outnumbered advancers on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored decliners.

The S&P 500 posted 27 new 52-week highs and two new lows; the Nasdaq Composite recorded 80 new highs and 133 new lows.

Volume on US exchanges was 11.81 billion shares, compared with the 12.05 billion average for the full session over the last 20 trading days.

(Additional reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai and Richard Chang)

US yields climb as ADP data shows solid job growth amid Middle East conflict

NEW YORK – Longer-dated US Treasury yields rose on Wednesday after economic data pointed to a stable labor market while investors monitored escalating Middle East hostilities after Iran fired missiles against Israel.

US private payrolls increased by a more than expected 143,000 jobs in September, according to the ADP National Employment Report, above the 120,000 estimate of economists polled by Reuters, adding to signs the labor market may not be cooling as fast as some initial concerns.

Yields had moved sharply lower in the prior session as Iran launched more than 180 missiles against Israel in an escalation of tensions in the region.

On Wednesday, Israel said eight of its soldiers were killed in combat in south Lebanon as its forces moved into its northern neighbor in a campaign against the Hezbollah armed group.

The US data comes ahead of the release on Friday of the government’s more comprehensive employment report for September. Federal Reserve Chair Jerome Powell and other central bank officials have signaled the Fed’s primary focus has shifted from combating inflation to ensuring a stable labor market.

The Fed kicked off its rate cut cycle in September with a big 50 basis point reduction.

The yield on 10-year Treasury notes was up 4 basis points at 3.783%. The yield has fallen for five straight months, including a third-quarter drop of more than 50 basis points as investors have anticipated an easier monetary policy from the Fed.

“The one thing to keep in mind is we’d had a rip-roaring rally, in reaction to what has been a handful of months of slower data, moderating inflation, that got capped with the Fed cutting interest rates 50 basis points,” said Robert Tipp, chief Investment Strategist and head of global bonds at PGIM Fixed Income in Newark, New Jersey.

“This market had come a long way very fast and yesterday’s geopolitical risk took down another rung but given 12 hours to think about it and nothing more grave developing set the markets up to get back some of the rally.

“With a mild-upside surprise on ADP it’s giving the market some natural pause here, to reflect on whether it’s overreacted to all the bullish data of recent weeks and months.”

Richmond Fed President Thomas Barkin said the central bank’s cut in September was an acknowledgement that its policy rate was “out of sync” with where the economy stands, but shouldn’t be seen as a sign the battle with inflation is finished.

Expectations for another cut of 50 bps at the November meeting have been decreasing recently, with markets pricing in a 34.7% chance, down from 57.4% a week ago, according to CME’s FedWatch Tool.

The yield on the 30-year Treasury bond rose 5.2 bps to 4.133%.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 14.6 bps.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, edged up 1.4 bps at 3.635%.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.13%, after closing at 2.097% on Tuesday, its highest close since July 31.

The 10-year TIPS breakeven rate was last at 2.217%, indicating the market sees inflation averaging 2.2% a year for the next decade.

(Reporting by Chuck Mikolajczak; Editing by Emelia Sithole-Matarise and Nick Zieminski)

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