Oil hovers near highest level of Iran war and stocks edge lower

NEW YORK (AP) — Oil prices are hovering near their most expensive levels since the war with Iran began. The U.S. stock market, though, continues to shrug it off and is dipping only modestly from its record heights.

The price for a barrel of Brent crude oil to be delivered in June jumped 7.3% to $119.34, as of 1:15 p.m. Eastern time and got as high as $119.76, bringing its gain of the week so far to more than 10%. Brent to be delivered in July, which is where more of the trading is happening in the oil market, rose 6.6% to $111.27 per barrel.

Oil prices have leaped as President Donald Trump appears willing to keep up the U.S. blockade of Iranian ships, which is preventing the country from making money by selling oil.

Iran, in turn, is keeping the Strait of Hormuz closed to other oil tankers hoping to carry crude to customers worldwide as long as the blockade continues.

The U.S. stock market lost some ground as the countdown ticks to an afternoon announcement from the Federal Reserve on what it will do with interest rates.

The S&P 500 fell 0.2%, a day after falling from its all-time high due to drops for artificial-intelligence stocks and worries about higher oil prices. The Dow Jones Industrial Average was down 335 points, or 0.7%,, and the Nasdaq composite fell 0.3%.

Some companies on Wednesday pointed out how the war is hurting their business: Booking Holdings swung between losses and gains after the online travel company said the war with Iran is affecting its results and kept some potential customers from booking rooms during the latest quarter.

The company behind Booking.com, Priceline and other brands is expecting the conflict to continue affecting its business through the end of June. It could affect travel not only in the Middle East but also in major transit corridors, such as between Europe and Asia.

Visa jumped 9% after delivering stronger results than analysts expected, and CEO Ryan McInerney said consumer spending remained resilient in the quarter. Starbucks climbed 9.1% after likewise reporting better results than expected, while saying customers spent more at each visit, particularly at its North American stores.

Most companies so far this earnings reporting season have been topping analysts’ expectations, which has helped the U.S. stock market rally to records despite the high gasoline costs and soured confidence among U.S. households caused by the Iran war.

But those not meeting expectations have gotten punished. GE Healthcare Technologies dropped 11.9% after falling short of analysts’ forecasts. Robinhood Markets tumbled 14.1% after reporting growth in profit that was not as strong as analysts expected.

In the oil market, Brent crude’s price is well above its roughly $70 level from before the war. A ceasefire is still in place between the United States and Iran, but so is a closure of the Strait of Hormuz by Iran and a U.S. blockade of Iran’s ships. That’s all keeping oil tankers pent up in the Persian Gulf and crude prices high.

Expensive oil is one of the main reasons virtually all of Wall Street believes the Federal Reserve will not announce a resumption of its cuts to interest rates in the afternoon. While lower rates can help the economy, they also risk worsening inflation.

The consensus among traders is instead that the Fed will hold the federal funds rate steady in what’s likely to be Jerome Powell’s final Fed meeting as its chair. The bigger question is whether Powell will say if he’s staying on at the central bank after ceding the chairmanship. He has been a target of President Donald Trump’s anger for not cutting interest rates more quickly and more sharply.

The yield on the 10-year Treasury rose to 4.40% from 4.36% late Tuesday following the latest rise in oil prices.

Elsewhere on Wall Street, several AI stocks held firmer ahead of reports due after trading ends for the day from the biggest spenders on AI technology. Alphabet, Amazon, Meta Platforms and Microsoft could help show whether all the investment in AI chips and data centers is providing the kind of profits and productivity that would make it all worth it. Worries are high on Wall Street that it may not be and that all the immense spending is just a bubble.

Broadcom fell 0.5%, a day after falling 4.4%. Nvidia slipped 1.7%.

In stock markets abroad, indexes fell in Europe following a stronger finish in Asia. Hong Kong’s Hang Seng jumped 1.7% for one of the world’s strongest moves.

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AP Business Writer Chan Ho-him contributed to this report.