- Oil prices surge as Gulf hostilities threaten Strait of Hormuz reopening
- AI demand drives global stocks to record highs despite Middle East tensions
- Benchmark S&P 500 flat but remains near record high
- Dollar rises while gold falls
NEW YORK, June 1 (Reuters) - Global stocks clung to record highs on Monday as strong corporate results, fueled in part by artificial intelligence optimism, outweighed investor concerns over escalating U.S.-Iran tensions that have pushed oil prices higher.
The U.S. said it struck Iranian military sites at the weekend and Iran's Revolutionary Guards said on Monday it had targeted a U.S. base in response. Iranian news agency Tasnim said Iran is halting indirect negotiations with the U.S. after Israel ordered troops to push deeper into Lebanon to battle Tehran-backed Hezbollah.
The fresh hostilities could complicate diplomatic efforts to end the three-month-long war.
On Wall Street, the benchmark S&P 500 was mostly flat but still near record highs as energy and technology stocks drove gains while consumer discretionary, materials and utilities led losers.
The Dow Jones Industrial Average fell 0.33%, the S&P 500 was flat, and the Nasdaq Composite rose 0.14%.
The pan-European STOXX 600 index fell 0.76%.
"The Iran story continues to swirl around in the background and I think it's pretty interesting and impressive that the market has been able to, not completely ignore it, but dismiss a lot of the noise," said Amanda Agati, chief investment officer at PNC Asset Management Group in Philadelphia.
"Earnings growth and Q1 earnings season, and even the revisions for Q2, are looking really strong. And so I think it's just sort of this interesting dynamic where usually the headlines are driving the market narrative, but this market is trying to price a path to peace, whatever that ultimately looks like."
Nvidia unveiled a new chip on Monday that puts AI capabilities directly into laptops and desktop computers, raising the stakes in the battle for dominance among other semiconductor makers and technology companies.
AI giant Anthropic said on Monday it has confidentially filed for a U.S. initial public offering.
The MSCI All-World index fell 0.10% after hitting a fresh record high on the day.
"We are in an unusual period for the market where the fundamentals and technicals converge to drive markets higher, with strong earnings revisions and relentless buying," said Mark Hackett, chief market strategist at Nationwide in Philadelphia.
"Equity markets have been largely immune to Iran news over the past several weeks because investors are afraid of being caught on the wrong side if a significant development occurs."
Brent crude futures rose nearly 8% to $97.23 a barrel.
DATA LINE UP
Investors are eyeing commentary from a host of Federal Reserve speakers this week as well as major U.S. data including the May payrolls report on Friday.
U.S. manufacturing activity increased more than expected in May, hitting the highest level in four years, likely driven by businesses front-loading orders amid rising prices and shortages because of the war with Iran, Institute for Supply Management data showed on Monday.
The yield on benchmark U.S. 10-year notes rose 5.3 basis points to 4.506%.
In currencies, the dollar rose against major currencies including the euro and yen.
The euro was down 0.36% against the dollar at $1.1617. The Japanese yen weakened 0.26% against the greenback to 159.69 per dollar.
Against the Swiss franc , the dollar strengthened 0.79% to 0.787. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.28% to 99.29.
Spot gold fell 1.55% to $4,465.70 an ounce while bitcoin fell 3.86% to $70,809.33.
Reporting by Chibuike Oguh in New York; Editing by Chizu Nomiyama and Nia Williams
Source: Reuters