Financial Markets                      06/03 09:35

   

   NEW YORK (AP) -- Oil prices are rising Wednesday following the latest 
flare-up in fighting to threaten the U.S.-Iran ceasefire, and U.S. stocks are 
stalling near their records.

   The S&P 500 slipped 0.3% from its all-time high. The Dow Jones Industrial 
Average was down 339 points, or 0.7%, as of 10:15 a.m. Eastern time, and the 
Nasdaq composite was 0.3% lower.

   Weighing on the market was a climb of 1.1% for the price of a barrel of 
Brent crude oil, the international standard, which brought it back to $97.07. 
It rose after the U.S. military said Iran fired missiles toward Kuwait and 
Bahrain, which failed to hit their targets. The United States said it then 
struck an Iranian military ground control station on an island in the Strait of 
Hormuz.

   The war with Iran has already sent oil prices and inflation higher, cranking 
up the pressure on the global economy. But oil prices remain below their peaks 
from earlier in the fighting, and hope seems to be remaining on Wall Street 
that the United States and Iran will ultimately agree to reopen the Strait of 
Hormuz to oil tankers. That would improve the global flow of crude and 
hopefully lower its price.

   Such hopes, along with strong profit reports from U.S. companies, have 
helped launch the U.S. stock market on a tremendous rally. If the S&P 500 can 
turn around and finish the day with a gain, it would be the 10th straight for 
the index, which would be its longest such streak in more than three decades.

   Medtronic climbed 5.3% after reporting a stronger profit for the latest 
quarter than analysts expected. It also increased its dividend payout going to 
investors.

   GameStop jumped 7.7% after the video-game retailer said its revenue in the 
latest quarter grew 14% from a year earlier. It also announced a program to 
send up to $2 billion to its investors by buying back its own stock.

   Macy's swung from an initial gain to a loss of 0.9% after the iconic New 
York department store reported profit for the latest quarter that blew past 
analysts' forecasts. The retailer said said an overhaul of its merchandise and 
better customer service is resonating with customers.

   Also on the losing side of Wall Street was Palo Alto Networks, which fell 6% 
despite topping analysts' expectations for profit in the latest quarter. 
Investors may have been looking for even more after its stock came into the day 
with a surge of 61.3% for the year so far, more than quintuple the S&P 500's 
already big 11.2% rise.

   In the bond market, Treasury yields rose with the price of oil, which put 
downward pressure on the stock market. The yield on the 10-year Treasury 
climbed to 4.48% from 4.46% late Tuesday and from just 3.97% before the war 
began.

   High yields worldwide recently have threatened to slow economies and 
undercut prices for stocks and all kinds of other investments. They have 
already forced the average long-term U.S. mortgage rate to its most expensive 
level in nine months, and they could curtail companies' borrowing to build the 
AI data centers that have supported the U.S. economy's growth recently.

   More expensive loans can hurt smaller companies in particular because many 
need to borrow to grow. The Russell 2000 index of the smallest U.S. stocks fell 
0.9%, more than the rest of the market.

   Reports on the U.S. economy came in mixed. One from the Institute for Supply 
Management said that growth for U.S. construction, agricultural and other 
services businesses accelerated by more last month than economists expected.

   That's an encouraging signal for the economy, but the survey also showed 
businesses are feeling the pinch of higher prices caused by tariffs and more 
expensive oil. "This is the definition of inflationary pressure starting to 
affect us," one company in the accommodation and food services industry said in 
the survey.

   In stock markets abroad, European indexes dipped following a mixed finish in 
Asia.

   Hong Kong's Hang Seng fell 1.6%, but Japan's Nikkei 225 jumped 2.5% to 
another record as computer chip equipment maker Tokyo Electron soared 13.4%.

   Excitement around the boom created by artificial-intelligence technology has 
been a huge engine for stock markets worldwide. On Wall Street, Marvell 
Technology rose another 7.1% following its best day on record, a surge of 
32.5%, after Nvidia CEO Jensen Huang suggested at a conference in Taiwan that 
Marvell could be "the next trillion-dollar company."

   The last company to enter the expanding club of behemoths was Micron 
Technology, which is likewise riding the AI wave.

   ___

   AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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