US Stocks Edge Within 0.5% of a Record as Oil Climbs on War

US stocks closed Wednesday within half a percent of their record high, even as oil jumped to its highest price in a month on renewed fighting between the United States and Iran. The S&P 500 rose 0.4% to 7,572.40, lifted by stronger than expected profits from BlackRock and other big banks. Brent crude settled at $84.95 a barrel, up 0.3%, after briefly topping $86 earlier in the day.

Two days earlier, traders had priced in a 42% chance the Federal Reserve would raise interest rates at its meeting later this month. A single inflation report cut those odds to just 10% by Wednesday, a wager now riding against a war that could send fuel costs right back up.

BlackRock and BNY Mellon Power a Bank Earnings Beat

BlackRock climbed 6.6% after the world’s largest asset manager posted stronger profit and revenue than Wall Street expected for the second quarter. Laurence Fink, BlackRock’s chief executive, said iShares topped $6 trillion in assets under management during the quarter. The exchange-traded fund (ETF) business has roughly doubled in size in three years.

BlackRock’s total assets hit a record $15.34 trillion. Adjusted earnings came in at $13.91 a share, ahead of the roughly $12.60 analysts had expected. Fink said active ETFs alone pulled in more than $70 billion in net inflows over the past year.

Bank of New York Mellon rose 5.1%, adding to a string of strong bank results reported a day earlier. Cintas climbed 4.4% after also topping profit forecasts. The company supplies workplace uniforms and restroom products to businesses nationwide.

The beats landed in the same week the reinstated Hormuz blockade collided with earnings season, a sign of how much geopolitical noise investors are trading through right now.

One Soft Inflation Report Rewrites the Fed’s Odds

Wholesale prices slowed last month. The Producer Price Index tracks prices businesses receive before goods reach store shelves. It rose 5.5% from a year earlier, down from 6% in May, well below what economists expected. A separate report a day earlier found consumer-level inflation also came in cooler than forecast.

Traders moved fast. Futures tracked by CME Group showed just a 10% chance the Fed raises its benchmark rate at its next meeting, down from nearly 42% on Monday, before the two inflation reports landed.

John Williams, president of the Federal Reserve Bank of New York, said in a speech that “there are encouraging reasons to expect that inflation has peaked and should edge down in coming quarters.”

Kevin Warsh, the Federal Reserve chair, was not ready to go that far.

Any central banker would be happy to have data going in the right direction. These are all imperfect measures of the state of underlying inflation.

Warsh told a Senate committee this week, careful not to promise the cooler data changes anything.

The Fed held its benchmark rate at 3.50% to 3.75% in June, its first meeting under Warsh, and dropped language that had signaled further cuts. The 10-year Treasury yield fell to 4.55% Wednesday, from 4.58% a day earlier and 4.62% the day before that.

Why Does This War Keep Pushing Oil Higher?

Brent crude settled at $84.95 a barrel Wednesday, its highest close in a month, as the United States and Iran traded strikes across the Middle East for another day. Each new round of fighting adds a fresh war premium to oil, even as Wall Street mostly shrugs it off.

The back and forth has been the pattern for months. Brent has swung from lows near $70 to highs above $110 since the war began in late February, moving with every shift in ceasefire talk.

JPMorgan’s commodities desk has estimated that global growth could be depressed by 0.6 percentage points on an annualized basis in the first half of the year if Brent holds near $80 a barrel through midyear. Higher energy prices feed directly into the same inflation numbers the Fed is watching.

Stocks have mostly looked past it. Energy makes up a smaller share of company costs than in past oil shocks, and the technology names driving most of the S&P 500’s gains carry little direct exposure to crude.

A Tougher Crowd for Earnings Beats

Elevance Health fell 8.5% Wednesday even though the health insurer beat both profit and revenue estimates. It was the clearest sign of the day that a beat alone will not move a stock this earnings season.

Corporate profit growth expectations are high enough this quarter that companies need a bigger surprise to justify their stock’s gains, with major indexes already sitting near their records.

The oil rally has created its own winners away from Wednesday’s bank earnings. Exxon Mobil’s market value has climbed past $600 billion this year and Chevron’s tops $370 billion, while shale producers like Ovintiv and APA Corp have climbed close to 50% since January.

As of early June, the Department of Energy said the government had drained 66 million barrels from the Strategic Petroleum Reserve since the war began. That has pushed the reserve to its lowest level since 1983.

Asia’s Chip Stocks Swing from Rout to Rally

South Korea’s Kospi jumped 6.2% Wednesday, a sharp reversal for an index that had already suffered drops of 8.9%, 7.9% and 5.3% earlier this month as AI-linked stocks swung wildly. The index is dominated by two chipmakers, Samsung Electronics and SK Hynix.

Confidence got a lift from Amsterdam. Christophe Fouquet, ASML’s chief executive, said customers were accelerating their expansion plans as AI progress continues. The Dutch maker of chipmaking machinery reported stronger revenue growth than it had forecast. ASML’s Amsterdam-listed shares slipped 0.4%, but its US-listed stock rose 2.2%.

The relief follows a rough stretch. Micron’s slide into a bear market rattled the AI trade earlier this month, and fresh US strikes in Iran had already sent the Kospi tumbling once before this week.

• South Korea: Kospi up 6.2%, led by Samsung Electronics and SK Hynix.
• Hong Kong: Stocks rose 1.4% on the day.
• Shanghai: Mainland shares fell 0.3% after growth data disappointed.
• Amsterdam: ASML slipped 0.4% locally despite a strong forecast.

China’s economy grew at a 4.3% annualized pace last quarter, the government said, down from 5% at the start of the year. The slowdown has done little to shake confidence in the AI trade so far.

The Fed’s July 28 Meeting Looms over the Bet

The Fed’s next meeting falls on July 28 and 29, with the rate decision coming on the second day. This one will not include fresh economic projections, part of Warsh’s push to scale back the forward guidance his predecessors relied on.

The backdrop is more hawkish than it looked earlier this year. At the June meeting, nine of the Fed’s 18 policymakers penciled in at least one rate hike for 2026. The committee’s median projection put core inflation at 3.3% for the year, well above the 2% target.

Oil is the wild card in that math. Fidelity’s midyear market outlook found crude carrying a 60% scarcity premium over historical baselines, a sign traders expect the physical squeeze on supply to keep prices elevated even if the fighting eases.

Another round of strikes near the Strait of Hormuz could send oil, and the odds of a Fed hike, right back toward where they stood on Monday.

Traders will find out on July 29 whether their bet on cooling inflation held up.

Frequently Asked Questions

Why Did BlackRock’s Stock Jump on Wednesday?

BlackRock beat profit and revenue estimates and posted a record $15.34 trillion in total assets, with adjusted operating margin expanding to 45.9%, its highest level in nearly five years. The company also raised its quarterly share buyback authorization to $550 million, lifting its planned 2026 repurchases to $2 billion.

What Is the Producer Price Index, and Why Did It Move Markets?

The Producer Price Index tracks prices businesses receive for goods and services before they reach consumers, making it an early read on pipeline inflation. The Fed’s preferred gauge is a different measure, the core Personal Consumption Expenditures index, which policymakers projected at 3.3% for this year.

When Does the Federal Reserve Meet Next?

The Federal Open Market Committee (FOMC) meets July 28 and 29. Unlike some meetings, this one will not include a fresh Summary of Economic Projections, the quarterly forecast that includes the Fed’s dot plot of individual rate expectations.

Why Does a War in the Middle East Move Oil Prices So Much?

The Strait of Hormuz, the shipping lane at the center of the conflict, carries roughly a fifth of the world’s oil trade. The International Energy Agency has called the disruption there the largest supply shock in the history of the global oil market.

Is BlackRock’s ETF Business Still Growing Outside the US?

Yes. BlackRock said its European iShares funds have raised $80 billion so far this year, pushing regional assets to $1.5 trillion, while its locally domiciled funds in Asia Pacific crossed $100 billion in assets during the quarter.