US stocks drift near their records as oil prices rise

The US stock market edged closer to its all-time high on Monday, while oil prices climbed due to uncertainty surrounding the potential reopening of the Strait of Hormuz. The S&P 500 ended the day 0.1 percent lower, after fluctuating between slight gains and losses, following its record set last Friday. The Dow Jones Industrial Average dropped 114 points, or 0.2 percent, as of 12:43 pm Eastern time, and the Nasdaq composite fell 0.5 percent.

Momentum slowed for stocks after a rally fueled by soaring profits for major US companies. Reports indicated that S&P 500 earnings per share were 50 percent higher in the spring year-over-year, the best growth since 2019, when the economy recovered from the COVID-19 pandemic. Companies such as Berkshire Hathaway and MarineMax reported strong profits, which helped them appear less expensive despite criticism of US stocks generally being pricey.

Berkshire Hathaway's stock increased by 2.1 percent, and its massive cash reserves allowed it to invest in other stocks. Meanwhile, Intel fell 2.5 percent after considering selling $15 billion of its shares, which could dilute existing investor holdings. In the oil market, the price of a barrel of Brent crude surged 3.7 percent to $86.69, following a volatile month as hopes for a US-Iran agreement to allow oil tankers to freely exit the Middle East rose and fell.

Higher oil prices contribute to inflation, and the upcoming inflation data on Wednesday will be a key event for Wall Street. Economists anticipate a slowdown in inflation to 3.4 percent from 3.5 percent in June, which could lessen the pressure on the Federal Reserve to raise interest rates. Higher rates would curb inflation but also slow the economy by making borrowing more expensive. In other markets, global indexes were mixed, with Japan's Nikkei 225 surging 2.1 percent.