Oil prices surge to two-week winning streak as Iran supply fears grip markets
Crude oil prices are rising on the anticipation of possible military action in Iran. Iran conducted some military operations that briefly shut down part of the Strait of Hormuz, which was apparently a threat of how Iran could cut off critical crude oil supplies. The U.S. and Iran are expected to meet again, and those negotiations are expected to be closely watched. In the meantime, the U.S. has implemented its largest buildup of forces in the region since the Gulf War to intimidate Iran. Apparently, the U.S. military is reportedly ready to strike Iran within days if negotiations stall.
Approximately 78% of the companies in the S&P 500 have announced their fourth quarter results, and so far, sales growth has risen at a 9% annual pace, while earnings have risen at a 12.1% annual pace. This is the tenth quarter in a row that earnings growth has exceeded sales growth, which means that operating margins are expanding and productivity is rising.
Nvidia (NVDA) will be the grand finale to this earnings announcement season on February 25th. Looking forward, double-digit earnings growth is forecasted for the remainder of this year for the S&P 500.
The Federal Open Market Committee (FOMC) minutes from the January meeting revealed that the vast majority of voting members wanted to hold steady on key interest rates. Since then, the Treasury yield curve has become the steepest in four years and the CPI has decelerated to a 2.4% annual pace.
Nonetheless, the FOMC minutes said, “the risk of more persistent inflation remained.” Furthermore, according to the FOMC minutes, most Fed officials were worried that the progress on getting inflation down to the 2% target “might be slower and more uneven than generally expected.”
The Commerce Department on Wednesday announced that durable goods orders declined 1.4% in December, which was better than economists’ consensus estimate of a 2% decline. Excluding volatile transportation orders that declined 5.3%, durable goods actually rose 0.9% in December. Overall, this was a positive report that helped to strengthen the U.S. dollar.