Today is
Wednesday June 03, 2026
NEW YORK (AP) — Oil prices rose Wednesday following the latest flare-up in fighting to threaten the U.S.-Iran ceasefire, and U.S. stocks retreated from their records.
The S&P 500 fell 0.7% from its all-time high for its first drop in 10 days. The Dow Jones Industrial Average dropped 620 points, or 1.2%, and the Nasdaq composite sank 0.9%.
Weighing on the market was a climb of 1.9% for the price of a barrel of Brent crude oil, the international standard, which brought it back to $97.81. It rose after both the United States and Iran said they launched retaliations for earlier attacks or attempted ones.
Palo Alto Networks helped drag the market lower, and it fell 5.6% even though it reported profit for the latest quarter that topped analysts’ expectations. 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.
Stocks also felt pressure from higher yields in the bond market, which climbed with the price of oil. The yield on the 10-year Treasury rose to 4.49% from 4.46% late Tuesday and from just 3.97% before the war began.
High yields worldwide are threatening 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 artificial-intelligence 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 1.3%, more than the rest of the market.
Reports released Wednesday on the U.S. economy came in mixed. One from the Institute for Supply Management said growth accelerated more last month for U.S. construction, agricultural and other services businesses than economists expected.
That’s an encouraging signal, 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.
Still, stocks remain near their records, even with all the pressure on the global economy created by higher inflation.
Oil prices remain below their peaks from earlier in the war with Iran, 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, helped launch the S&P 500 on its nine-day winning streak that ended Wednesday, one day shy of its longest in three decades.
Medtronic climbed 5.7% after reporting a stronger profit for the latest quarter than analysts expected. It also increased its dividend payout going to investors.
GameStop rose 6% 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 added 0.6% after swinging between gains and losses through the day. The retailer reported profit for the latest quarter that blew past analysts’ forecasts, while saying an overhaul of its merchandise and better customer service is resonating with customers.
All told, the S&P 500 fell 56.10 points to 7,553.68. The Dow Jones Industrial Average dropped 620.72 to 50,687.07, and the Nasdaq composite sank 239.93 to 26,853.98.
In stock markets abroad, European indexes fell following a mixed finish in Asia.
Hong Kong’s Hang Seng dropped 1.6%, but Japan’s Nikkei 225 jumped 2.5% to another record.
Excitement around the boom created by AI technology has been a huge engine for stock markets worldwide. On Wall Street, Marvell Technology rose another 3.7% 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.
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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.
NEW YORK (AP) — The U.S. stock market is ticking toward more records Tuesday as winners of the artificial-intelligence boom keep driving higher.
The S&P 500 rose 0.2% a day after setting its latest all-time high. The Dow Jones Industrial Average was up 140 points, or 0.3%, as of 11:30 a.m. Eastern time, and the Nasdaq composite was 0.2% higher. All three indexes erased modest losses from earlier in the morning.
AI chip companies helped drive the market upward. Their growth has skyrocketed because of how hungry customers are for more AI computing power, and Broadcom rose 4.4%, while Nvidia added 0.7%.
Marvell Technology leaped 28.4% toward its best day in three years after Nvidia’s CEO, Jensen Huang, suggested at a conference in Taiwan that Marvell could be “the next trillion-dollar company.” The latest entry into the growing club was last week by Micron Technology, which is likewise riding the AI wave. Nvdia’s total value, meanwhile, has exploded over $5.8 trillion.
Hewlett Packard Enterprise’s stock soared 23.3% after it reported a profit for the latest quarter that blew past analysts’ expectations. It credited demand from customers building their AI capabilities.
Generac climbed 5.7% after saying it signed a deal to provide backup power generators to an unnamed “leading hyperscale data center operator.”
Such “hyperscalers” are spending tremendous amounts of money to build the huge AI data centers that are powering what proponents believe will be the next great revolution for the global economy.
Alphabet is one of them, and the parent company of Google said it’s raising $80 billion in cash to help pay for its investments by selling shares of its stock. It’s planning to spend as much as $190 billion on equipment and other investments this year.
That’s more than all the stock of The Walt Disney Co., is worth, and Alphabet is forecasting its spending on investments next year will “significantly increase.”
Such huge sums raise the question about whether AI can produce the profits and productivity necessary to make all the investment worth it. Critics have already been talking about the possibility of a bubble in AI investment, and Alphabet’s stock fell 1.8%.
Analysts have been saying the broad U.S. stock market may be set for a slowdown following an unrelenting streak of nine straight winning weeks for the S&P 500, its longest since 2023. The rally has been due to strong profit reports from U.S. companies, as well as hopes that the United States and Iran will reach a deal to reopen the Strait of Hormuz. That would allow oil to flow freely again from the Persian Gulf and hopefully lower its price.
In the oil market, prices were calmer following Monday’s bounce back. Brent crude oil, the international standard, fell 0.3% to $94.67 per barrel, though that’s still well above the roughly $70 level it was at before the war.
In the bond market, Treasury yields were relatively steady.
The yield on the 10-year Treasury slipped to 4.45% from 4.47% late Monday. It briefly jumped after a report said that U.S. employers were advertising many more jobs at the end of April than economists expected, a potential signal of continued health for the U.S. labor market. But it quickly pulled back to where it was just before the report’s release.
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.
In stock markets abroad indexes rose across much of Europe and Asia.
Hong Kong’s Hang Seng jumped 2.5% for one of the world’s biggest moves.
NEW YORK (AP) — Oil prices are rising Monday following the latest fighting to threaten the U.S.-Iran ceasefire, but Wall Street isn’t very worried, and U.S. stocks are hanging near their records.
The S&P 500 was virtually unchanged from its all-time high set on Friday. The Dow Jones Industrial Average was down 102 points, or 0.2%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was flat. Both are also coming off records.
Some of the sharpest losses hit companies with big fuel bills hurt by the rise in oil prices. United Airlines lost 2.9%, and cruise-operator Carnival fell 2.7% after the price for a barrel of Brent crude oil climbed 6.7% to $97.22. That clawed back a chunk of its loss from last week and means it’s still well above its price of roughly $70 from before the war.
Expensive oil has already sent inflation around the world higher, which not only increases bills for households but also pushes up bond yields. High yields worldwide recently have threatened to slow economies and undercut prices for stocks and all kinds of other investments.
Some of the hardest hit by high interest rates are smaller companies, which have a tougher time borrowing to grow when loans are more expensive to repay. The Russell 2000 index of the smallest U.S. stocks sank 1%, much more than the rest of the market.
But hope seems to be remaining on Wall Street that the United States and Iran will ultimately reach an agreement to reopen the Strait of Hormuz, allow deliveries of oil to resume from the Persian Gulf and ease the upward pressure on inflation.
Strength from several market heavyweights also helped to overshadow such fears.
Nvidia was the strongest force pushing upward the market and rose 4.8% after CEO Jensen Huang announced several product updates at a conference. Among them, he said the company’s next-generation artificial-intelligence platform, Vera Rubin, is ramping into full production. That helped calm some investor concerns about potential delays, analysts said.
What Nvidia does matters immensely for the U.S. stock market because it’s the biggest in terms of overall market value. That means the movements for its stock carry more weight on the S&P 500 than any other’s.
And Wall Street’s biggest companies have been growing so much that they’re dominating the market. The top 10 stocks control nearly half the S&P 500’s total market value, a 40-year high, according to Thomas Carroll, equity market strategist at Stifel.
That worked well as those Big Tech companies shot higher thanks to exuberance around AI. But it could also weigh on the index if the market’s leadership broadens, Carroll warns. Even if most stocks end up rising in such a rotation, stagnation or declines for Big Tech heavyweights could drag on S&P 500 index funds.
And a key indicator Carroll follows about market breadth “is signaling a rotation is coming,” he wrote in a report.
Elsewhere on Wall Street, Science Applications International Corp. jumped 12.8% after becoming the latest U.S. company to report bigger profit for the latest quarter than analysts expected. SAIC also raised forecasts for upcoming financial results after winning several contracts from the U.S. Department of Homeland Security, army and other agencies.
A cavalcade of such profit reports has helped the U.S. stock market push to records despite the war with Iran.
Berkshire Hathaway slipped 0.4% after it said it would buy Taylor Morrison Home for $6.8 billion. It’s one of the first big acquisitions announced by the company under Greg Abel’s leadership following famed investor Warren Buffett. Taylor Morrison Home jumped 22.5%.
In the bond market, Treasury yields rose with oil prices and after a report said growth in U.S. manufacturing accelerated by more last month than economists expected. The yield for the 10-year Treasury climbed to 4.50% from 4.45% late Friday.
High yields 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.
In stock markets abroad, indexes fell in Europe following a stronger finish in Asia.
Japan’s Nikkei 225 rose 0.9%, and South Korea’s Kospi jumped 3.7% to hit records led by technology-related stocks, as investors continued to see growth in AI and other advanced technologies.
In South Korea, the Kospi index jumped 3.7% to a record. Samsung Electronics, its biggest company, soared 10.1%. Official data on Monday showed that South Korea’s exports surged 53% year-on-year in May, buoyed by global demand for semiconductors.
NEW YORK (AP) — The U.S. stock market is pushing to more records Thursday as companies like Dollar Tree, Snowflake and Hormel Foods keep piling up profits. That’s even as oil prices continue to swing and more data shows pressure building on the economy because of the war with Iran.
The S&P 500 added 0.4% to its all-time high set the day before after drifting between small gains and losses earlier in the morning. The Dow Jones Industrial Average was down 9 points, or less than 0.1%, as of 11:15 a.m. Eastern time, and the Nasdaq composite was 0.5% higher after both indexes also set records the day before.
Even with worries about expensive oil and high inflation, the U.S. stock market has run to records largely because U.S. companies keep making more money. Stock prices tend to follow the path of corporate profits over the long term, and companies have been routinely topping analysts’ expectations for the first three months of 2026.
Dollar Tree’s stock soared 18.1% after it became the latest to report fatter profit than analysts expected. CEO Mike Creedon said improved store conditions helped the retailer make more profit off each $1 in sales during the latest quarter despite tariffs adding to its costs. The company also gave a forecast for profit over the full year that topped analysts’ expectations.
Kohl’s rallied 16.3% after the retailer reported better results for the latest quarter than analysts had feared, while Best Buy climbed 15.9% following its own better-than-expected profit report. Hormel Foods climbed 9.8% after a strong performance for its Jennie-O ground turkey and exports of its Spam luncheon meat helped it report a better profit than analysts expected.
Snowflake rose 34.1% after saying artificial intelligence continues to be a strong driver of its business, and profit and revenue for the latest quarter exceeded expectations.
They helped offset a dip for Marvell Technology, which fell 1.3% after its profit for the latest quarter only matched analysts’ expectations. It also said AI is driving big revenue growth for it, particularly its data center business.
In the oil market, prices ticked higher following their latest U-turns. The price for a barrel of benchmark U.S. crude oil rose 1.2% to $89.76, but only after bouncing between $87 and $92. It’s been swinging as hopes rise and fall that the United States and Iran may reach a deal to reopen the Strait of Hormuz and get oil flowing again from the Persian Gulf to customers worldwide.
The latest threat to the ceasefire in the war came after U.S. Central Command said Kuwait had intercepted missiles launched by Iran late Wednesday night. That followed earlier “defensive” strikes by the U.S. military on missile launch sites and minelaying boats in southern Iran.
In the bond market, Treasury yields eased after a report said the measure of inflation that the Federal Reserve likes to use accelerated last month but was roughly within economists’ expectations.
The yield on the 10-year Treasury fell to 4.46% from 4.48% late Wednesday after giving up an earlier gain.
Data also showed how U.S. households are less able to save money, with the personal savings rate down to a four-year low of 2.6%, “pointing up the financial pressure on lower- and middle-income families,” according to Gary Schlossberg, global strategist at Wells Fargo Investment Institute.
U.S. households have been saying they’re feeling discouraged about the economy and inflation, even as the stock market keeps chugging along.
High yields in bond markets worldwide recently have threatened to slow economies and undercut prices for stocks and all kinds of other investments. High yields have already forced the average long-term U.S. mortgage rate to its most expensive level since last summer, and they could curtail companies’ borrowing to build the AI data centers that have supported the U.S. economy’s growth recently.
A report on Thursday said the pace of sales of new U.S. homes unexpectedly slowed last month, as the weight of higher mortgage rates hurts the market.
In stock markets abroad, indexes dipped across much of Europe and Asia. Hong Kong’s Hang Seng fell 1.3% for one of the world’s larger losses.
NEW YORK (AP) — U.S. stocks inched to more records Wednesday after oil prices fell and eased the pressure on households and businesses worldwide.
The S&P 500 edged up by less than 0.1% and added to its all-time high set the day before. The Dow Jones Industrial Average climbed 182 points, or 0.4%, and the Nasdaq composite gained 0.1% as both indexes also set records.
Stocks of companies with big fuel bills helped lead the way on hopes that lower oil prices will remove a big drag on their profits. Norwegian Cruise Line Holdings climbed 6.1%, and United Airlines rallied 6.3%. Delta Air Lines rose 3% and set an all-time high.
The price for a barrel of Brent crude oil fell 4.6% to $92.25 after the ceasefire between the United States and Iran appeared to hold despite the U.S. military launching what it called “self-defense” strikes in southern Iran. A barrel of benchmark U.S. crude fell even more, 5.5%, to settle at $88.68 and is back to where it was in mid-April on hopes that the United States and Iran can reach an agreement to reopen the Strait of Hormuz and allow oil tankers to exit the Persian Gulf for deliveries again.
Stocks have been able to run to records despite the painful inflation and uncertainty caused by high oil prices largely because companies have reported surprisingly strong profits for the start of 2026, and the forecast is for them to continue.
Bath & Body Works rallied 9.7%, and Abercrombie & Fitch climbed 8.9% after both reported bigger profit for the latest quarter than analysts expected. That’s even as U.S. consumers continue to say they’re feeling discouraged about the economy and inflation.
Lululemon Athletica rose 2.9% after reaching a deal with its founder, Chip Wilson, where it will add a former chief marketing officer of ESPN and a former co-CEO of On to its board of directors.
On the losing side of Wall Street was Dick’s Sporting Goods, which dropped 6% despite delivering a profit for the latest quarter that edged past expectations. Analysts pointed to how much profit it wrung out of each $1 in revenue, which some called a bit weak.
Oil-and-gas stocks also sank, hurt by the dropping prices for crude. Exxon Mobil fell 1.3%, and Chevron slipped 1.3%. Halliburton dropped 3.6% to bring its gain for the year so far back toward 40%.
All told, the S&P 500 rose 1.24 to 7,520.36. The Dow Jones Industrial Average climbed 182.60 points to 50,644.28, and the Nasdaq composite gained 18.55 to 26,674.73.
In the bond market, Treasury yields eased after falling oil prices took pressure off inflation. The yield on the 10-year Treasury slipped to 4.48% from 4.50% late Tuesday and from 4.67% roughly a week ago.
It’s a respite following recent gains for yields in bond markets worldwide, which threatened to slow economies and undercut prices for stocks and all kinds of other investments. High yields have already forced the average long-term U.S. mortgage rate to its most expensive level since last summer, and they could curtail companies’ borrowing to build the artificial-intelligence data centers that have supported the U.S. economy’s growth recently.
In stock markets abroad, indexes were mixed across Europe and Asia. South Korea’s Kospi was one of the world’s best performers and jumped 2.3% after SK Hynix, which is a big beneficiary of the AI boom, soared 9.3%.
A day before, Micron Technology surged to become the latest Big Tech company to be worth more than $1 trillion because of AI excitement. Its stock has more than tripled already in 2026, and analysts at UBS said Tuesday it could soar even more because of how fundamentally AI has improved demand for computer memory. It rose another 3.6% Wednesday.
NEW YORK (AP) — The U.S. stock market rose to records Tuesday as it caught up with climbs for others around the world from the day before, when President Donald Trump said negotiations were “proceeding nicely” with Iran on ending their war.
The S&P 500 climbed 0.6% after trading resumed following Monday’s holiday and set an all-time high. The Nasdaq composite rallied 1.2% to set its own record, while the Dow Jones Industrial Average dipped 118 points, or 0.2%, from its all-time high.
Stock markets in much of the rest of the world pulled back from their gains the day before, as fighting continued in the region and the U.S. military said it carried out “self-defense” strikes in southern Iran, including on missile launch sites and boats placing mines. Markets have rallied in the past on hopes for a coming end to the war with Iran, only to see the conflict drag on.
U.S. stocks are rising in early trading following the holiday weekend.
Oil prices have been at the center of financial markets’ action since the United States and Israel attacked Iran in late February. The ensuing war has closed the Strait of Hormuz and kept oil tankers pent up in the Persian Gulf instead of delivering crude to customers worldwide. That in turn has driven up oil’s price and sent a wave of painful inflation around the world.
Hopes for a deal to improve the flow of oil helped lift stocks of companies with big fuel bills. United Airlines rose 6%, and Norwegian Cruise Line Holdings steamed 4.9% higher.
Big technology stocks also continued their big runs. Micron Technology’s stock leaped 19.3% to top $895.88 and was the strongest force lifting the S&P 500 after analysts at UBS led by Timothy Arcuri raised their 12-month price target for the stock to $1,625 from $535.
The analysts are forecasting continued strength in demand for computer memory, and Micron’s stock has already more than tripled so far this year. It’s the latest Big Tech company to top an overall value of $1 trillion and joined such behemoths as Nvidia, Apple and Microsoft, which have each blown past $3 trillion.
On the losing side of Wall Street was AutoZone, which dropped 9% after reporting slightly weaker revenue for the latest quarter than analysts expected. CEO Phil Daniele said performance for the retailer’s stores in Brazil and Mexico was below its plan, though its overall profit topped analysts’ expectations.
All told, the S&P 500 rose 45.65 points to 7,519.12. The Dow Jones Industrial Average dipped 118.02 to 50,461.68, and the Nasdaq composite climbed 312.21 to 26,656.18.
Lower oil prices helped pull yields down in the U.S. bond market, which eased the pressure on Wall Street. The yield on the 10-year Treasury fell to 4.49% from 4.56% late Friday.
It’s a respite following recent gains for yields in bond markets worldwide, which threatened to slow economies and undercut prices for stocks and all kinds of other investments. High yields have already forced the average long-term U.S. mortgage rate to its most expensive level since last summer, and they could curtail companies’ borrowing to build the artificial-intelligence data centers that have supported the U.S. economy’s growth recently.
Most big U.S. companies have been reporting both profit and revenue for the start of 2026 above what analysts expected. The strong performances have helped vault U.S. stocks to records, even with all the uncertainty around oil prices and the war with Iran.
U.S. households have been feeling discouraged about the economy because of accelerating inflation, and a report on Tuesday said consumer confidence edged downward in May, though the number was not as bad as economists expected. It followed a report on Friday that said sentiment among U.S. consumers hit its lowest level on record.
In stock markets abroad, many indexes slipped, including a 0.2% dip for Japan’s Nikkei 225 from its all-time high set the day before.
South Korea’s Kospi jumped 2.5% as it caught up with other markets following its closure on Monday for a holiday. London’s FTSE 100 added 0.2% even though British petroleum giant BP fell 4% there. BP ousted its chairman over what it called serious concerns related to “important governance standards, oversight and conduct.”
(NEW YORK) -- U.S. Treasury yields soared in recent days as the Iran war stoked inflation fears, threatening to drive up borrowing costs for everything from mortgages to credit cards to auto loans.
The yields on 30-year bonds – the amount paid to a bondholder annually – touched their highest point since 2007. Ten-year Treasury yields peaked at about 4.69% on Tuesday, marking a roughly three-quarter percentage point jump from the start of the war on Feb. 28.
The yield on 10-year Treasuries retreated on Wednesday, registering at 4.58%. Still, yields exceed the level reached during a bond selloff in the aftermath of President Donald Trump’s “Liberation Day” tariffs in April 2025.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks higher consumer prices that would eat away at those annual payouts. In this case, a global oil shock has pushed up energy prices which in turn has trickled into other costs, such as groceries.
As a result, bonds have become less attractive. When demand falls, bond yields rise.
“It’s really all about the Iran war and its inflationary impact,” Ted Rossman, a senior industry analyst at Bankrate, told ABC News.
High bond yields make borrowing more expensive for average Americans because Treasury rates influence the rates offered by lenders.
Long-term Treasury yields help set interest payments for mortgages, credit cards, car loans and just about any other type of borrowing, Patrice Carrington, a professor of real estate at New York University, told ABC News.
The reason for the rise in borrowing costs is that regulated lenders are required to hold reserve assets, often made up in part by U.S. Treasuries, Carrington added. When Treasury yields rise, it raises the costs incurred by banks holding Treasuries on their books. Lenders, in turn, offset those added expenses with higher borrowing costs.
“The bank will pass along that higher cost of capital to any consumer loan,” Carrington said.
The onset of this pain for consumers is exemplified by the housing market, where the average interest rate for a 30-year fixed mortgage stands at 6.72% as of Monday, Mortgage News Daily data showed. Mortgage rates have climbed three-quarters of a percentage point from pre-war levels.
“That’s a really big jump,” Rossman said.
Each percentage-point rise in a mortgage rate can impose thousands or tens of thousands of dollars in additional costs each year, depending on the price of the house, according to Rocket Mortgage.
Credit card rates, by contrast, have remained flat over the course of the Iran war, though at heightened levels, Rossman said.
The average credit card interest rate stands at 19.57%, just slightly below where it stood before the war began, Bankrate data showed. At the start of 2026, futures markets expected the Fed to likely cut interest rates at least once by the end of the year, which would put downward pressure on credit card rates.
As the Fed weathers a renewed bout of inflation, however, markets estimate about a 50% chance of interest rates remaining unchanged over the course of the year and a 37% chance of a rate hike, according to the CME FedWatch Tool, a measure of market sentiment. Markets peg the odds of a rate cut this year at less than 2%.
As a result, credit card rates "are staying higher for longer" than many observers anticipated, Rossman said.
Analysts differed in their recommendations for consumers weighing whether to move forward now with securing a loan or wait for a potential decline in interest rates.
Liu Lu, a professor at the Wharton School at the University of Pennsylvania, said mortgage rates are unlikely to decline substantially in the near-term, meaning borrowers who can afford a loan at current rates may as well take the plunge.
“I wouldn’t bet on trying to catch the opportune moment,” Lu told ABC News.
Carrington, on the other hand, counseled patience for loan seekers.
Eventually, the economy will falter and the Fed will cut interest rates, pushing down borrowing costs, according to Carrington.
“We’re long overdue for a downturn,” Carrington said. “I absolutely think borrowers should wait.”
In the meantime, the impact of elevated bond yields on consumers isn't entirely negative. The trend means better returns for investors who place their money into financial instruments such as money market funds or high-interest savings accounts, which are historically safer investments than the stock market.
Copyright © 2026, ABC Audio. All rights reserved.
NEW YORK (AP) — The bond market is usually a quiet corner of Wall Street, one where moves get measured in hundredths of a percentage point. But the warning signals it sends can be powerful enough to drag stock markets up and down and in the past have even convinced President Donald Trump and other world leaders to back off some of their most extreme actions.
It’s making noise again.
Bond markets around the world have seen yields climb to heights not reached in years and, in some cases, decades. Atop the litany of reasons for that is oil prices and whether they will stay high because of the war with Iran. Worries about big and growing debts for the U.S. government and others are also influencing bond markets.
The rising yields are putting downward pressure on stock markets after they rocketed to records on excitement about big corporate profits and the promise of artificial-intelligence technology. They’re also dragging on economies around the world. Here’s a look at what’s going on, and how things got this way:
Budding bond yields
In the United States, the centerpiece of the bond market has hit its highest yield in more than a year. The 10-year Treasury yield, which shows how much interest investors want the U.S. government to pay them before they’ll lend it money for a decade, has topped 4.60%. That’s up from less than 4% before the Iran war began in late February, and it’s a notable move for the bond market.
Other kinds of yields are even higher. The 30-year U.S. Treasury yield has jumped well above 5% and is back to where it was in 2007, before the 2008 financial crisis sent yields crashing toward zero worldwide.
In Japan, the yield on the 10-year government bond has climbed back to where it was in the 1990s.
High yields can slow the economy
When the U.S. and other governments have to pay more in interest to borrow money, so do people and companies without the power to repay debts by levying taxes.
For many U.S. households, that’s most easily seen through rates for mortgages. Such rates have climbed with Treasury yields since the Iran war began, and the average rate on a 30-year fixed mortgage has stubbornly remained above 6%, breaking from its general downdraft before the Iran war.
Higher yields also make it more expensive for U.S. companies to borrow money to build factories and otherwise grow. That’s particularly dangerous at this moment, when big investments in data centers to power AI are a major driver of the U.S. economy’s growth.
If higher yields discourage companies from borrowing to build more data centers, that could undercut the economy when U.S. households say they’re already discouraged about inflation and tariffs.
High yields affect all kinds of investments
A slowdown in the economy is one of the reasons higher yields put downward pressure on the stock market. It threatens the amount of profits that companies can make, which is the lifeblood of the stock market.
High yields undercut the stock market in other ways too. When a Treasury is paying more in interest, that can draw investors away from investments that carry more risk. Why pay record prices for U.S. stocks when a U.S. government bond is paying more than before to wait in relative safety?
For Michael Wilson and other strategists at Morgan Stanley, the 10-year U.S. Treasury yield crossing above 4.50% was a big moment. Above that level is when rates “could serve as more of a noticeable headwind” for stocks.
Not only do stock prices feel downward pressure from high yields in the bond market, so do gold, bitcoin and many other investments.
High yields affect the government
When yields rise, the U.S. and other governments have to pay more in interest to cover their debts. That’s painful when debt loads for governments worldwide are ballooning as they spend far more than they’re bringing in through revenue.
That’s why jumps in yields can scare politicians even more than swings in the stock market.
The bond market helped make Liz Truss the United Kingdom’s shortest-serving prime minister in 2022, when it revolted against her plan to cut taxes and raise spending without a way to pay for them.
Last year, Trump said the bond market may have played a role in his decision to delay many of his proposed tariffs, saying that he noticed investors there “were getting a little queasy.”
And while Trump is famously difficult to predict, bond yields may have jumped enough that “this is the first time we may be close to the point that markets could force Trump’s hand” when it comes resolving the Iran war, according to Tobin Marcus at Wolfe Research.
Can’t the Federal Reserve cut interest rates?
Yes, but there’s a catch. The Fed controls just one part of the bond market: the federal funds rate, which covers overnight loans. Otherwise, it’s not the Fed but investors who set yields for 2-, 10- and 30-year Treasurys.
Of course, where the Fed sets the federal funds rate does filter out and affect other areas of the bond market. But investors are also considering where the economy and inflation are heading in coming years as they settle on how much interest they need to be paid to lend the government money.
At the moment, the U.S. economy looks to be solid enough and inflation looks to be a big-enough threat, that they’re asking for higher yields. Reports showed that U.S. employers hired more workers last month than economists expected, while inflation worsened by more than forecast.
Because of such data and worries about oil prices staying high, investors believe the Fed will most likely leave the federal funds rate alone this year. If the Fed does make a move, expectations are more for a hike to rates than a cut, according to data from CME Group. That’s even though Trump keeps calling for lower rates and now has his man in place to lead the Fed as its chair.
If the Fed were to cut interest rates anyway, that could spark fears that its commitment to keeping inflation low is wavering. That in turn could send the 10-year Treasury yield even higher.
(NEW YORK) -- A jury on Monday found that Elon Musk waited too long to bring claims accusing OpenAI, under Sam Altman’s leadership, of abandoning its public-benefit mission as it moved toward a for-profit structure.
The nine-person advisory jury determined that the claims against OpenAI and Altman were barred due to the statute of limitations. Judge Yvonne Gonzalez Rogers accepted the determination and dismissed the claims.
The three-week trial at a federal courthouse in Oakland, California, featured testimony from Musk and Altman, as well as Microsoft CEO Satya Nadella.
When Musk sued OpenAI and Altman two years ago, he claimed that the company abandoned its mission of benefiting humanity.
Musk, a co-founder of OpenAI, said he reached an agreement with the company's leaders on the nonprofit course of the firm when it launched in 2015.
Musk accused the company of later breaching agreement when it made ChatGPT-4 available for use by Microsoft -- meaning the tech giant got access to the then-most powerful version of its popular chatbot under an exclusive licensing agreement. Microsoft and OpenAI have renegotiated the exclusive licensing agreement, allowing OpenAI to strike deals with other tech firms.
OpenAI rebuked the charges, calling them "baseless." Microsoft also denied any wrongdoing. Musk, the world's richest person, counts $803 billion in wealth, according to Forbes. He was seeking $150 billion in damages from the tech companies, as well as the removal of Altman from OpenAI's board of directors.
Musk also sought a legal order that requires OpenAI to abide by its alleged founding mission of aiding humanity and retaining its nonprofit form
OpenAI, which is not publicly traded, valued itself at $852 billion after a round of funding in March. Microsoft's value -- as measured by market capitalization -- stands at about $3.1 trillion.
Musk pleaded two claims against OpenAI: unjust enrichment and breach of charitable trust.
Lawyers for Altman argued that Musk was motivated by a pursuit of control over OpenAI, rather than an effort to safeguard its non-profit status. In fact, Musk sought to fold OpenAI into Tesla -- a move that would have absorbed the venture into a for-profit entity, lawyers for Altman said in a legal filing.
In 2018, Musk told a former OpenAI employee that financial support from Tesla would help OpenAI compete with tech giant Google, the filing said.
"Tesla [was] the only path that could even hope to hold a candle to Google," Musk said, according to the legal filing.
For his part, Musk said in the lawsuit that the agreement on OpenAI's non-profit status was memorialized in a legal filing when OpenAI was incorporated.
In the lawsuit, Musk alleged that Altman and OpenAI President Greg Brockman reaffirmed the founding agreement in written messages over the ensuing years.
"[I] remain enthusiastic about the non-profit structure!" Altman wrote to Musk in 2017, according to the lawsuit.
Musk, who helped bankroll OpenAI, launched a rival for-profit AI company in 2023 called xAI, which built a chatbot that competes with ChatGPT.
Acknowledging his previous criticism of the pace and ambitions of AI development, Musk said in a conference call on X in July 2023 that he entered the industry reluctantly.
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SEATTLE (AP) – Starbucks said Friday it’s laying off 300 corporate employees and closing some U.S. offices as part of its ongoing turnaround.
No coffeehouse employees are affected, the company said. The cuts will impact employees in support functions like marketing, human resources and supply chain management. No international employees are affected for now, but Starbucks said it is also reviewing its corporate structure outside the U.S.
Starbucks said it’s also closing underused offices in Atlanta, Dallas, Chicago and other cities. The Seattle-based company recently announced that it’s opening a corporate office in Nashville, Tennessee, that will employ up to 2,000 people within five years.
Starbucks expects to the moves to result in $400 million in restructuring charges, including $120 million in employee separation benefits.
Starbucks has been trying to reduce costs and complexity under Chairman and CEO Brian Niccol, who joined the company in 2024. Last year, the company laid off 2,000 corporate employees and closed hundreds of stores in the U.S., Canada and Europe.
Niccol said last month that the simplified structure is helping the company innovate more quickly. Starbucks is also investing in its remaining stores to improve customers’ experience. It plans to redesign 1,000 U.S. stores this year to give them a cozier, more comfortable feel, and it’s also hiring baristas to ensure faster service during busy times.
The efforts appear to be paying off. In the January-March period, Starbucks said its U.S. same-store sales, or sales at locations open at least a year, jumped 7%. Niccol called the quarter “the turn in our turnaround.”
“Our focus now is on sustaining our momentum and making our results repeatable and durable, all while delivering a healthy cost structure that supports profitable growth,” Niccol said during a conference call with investors. “It’s how we turn progress into consistent results.”
(NEW YORK) -- A global pandemic that put millions of Americans out of work within days. The highest inflation in four decades. An unprecedented federal criminal investigation.
Fed Chair Jerome Powell faced a succession of crises over his 8-year tenure atop the central bank, which ends on Friday. Powell’s decisions along the way held stakes as concrete as the budgets of everyday Americans and as heady as the political independence of a pillar institution.
President Donald Trump’s Fed Chair nominee Kevin Warsh is set to take the helm, inheriting a resilient economy by some measures, though one suffering from a renewed bout of inflation.
Powell said last month that he would take the unusual step of staying on at the central bank's 12-person board of governors after his term expires. The move grants Powell a role in interest-rate policy that could last until 2028, though he says he will step down once a Fed inspector general's investigation into a renovation of the central bank headquarters is closed.
The transition offers an opportunity to look back at Powell’s tenure, which spanned two presidents, three Treasury secretaries and 66 interest-rate decisions.
"You don't choose your challenges, but you do choose how you respond," Claudia Sahm, chief economist at New Century Advisors and a former Fed official, told ABC News. "In the end, Powell's legacy will be judged by those outcomes."
When Trump nominated Powell to become Fed chair, Trump described him as a "consensus builder" who "understands what it takes for our economy to grow."
Powell, a former investment banker and Treasury official under President George H.W. Bush, assumed the role in 2018. At the time, the economy was humming, the unemployment rate clocked in at a historically low level and inflation stood just a tick above the Fed’s target rate of 2%.
Powell hiked interest rates four times in his first year, putting strain on the stock market but leaving the Fed in position to stimulate the economy with rate cuts in the event of a slowdown. Policymakers wouldn’t have to wait long.
In the early months of 2020, the COVID-19 pandemic put tens of millions of Americans into lockdown, halting business across industries like restaurants and hospitality, while putting a large swathe of the labor force out of work.
At an emergency meeting in March 2020, Powell slashed interest rates to near-zero levels in an effort to stimulate a battered economy.
“Families, businesses, schools, organizations, and governments at all levels are taking steps to protect people’s health. These measures, which are essential for containing the outbreak, will nonetheless understandably take a toll on economic activity in the near term,” Powell told reporters at the time.
The unemployment rate soared from 4.4% in March to 14.7% in April, U.S. Bureau of Labor Statistics data showed.
To supercharge the recovery, Trump and President Joe Biden enacted economic stimulus meant to support people who'd lost their jobs or faced other hardship. Alongside low interest rates, that spending helped bring about a speedy economic recovery from the downturn.
The COVID-19 recession lasted only two months, making it the shortest in U.S. history, according to the National Bureau of Economic Research.
The speedy recovery vindicated the Fed's decision to slash interest rates, though it hadn’t been a particularly difficult choice, Alan Blinder, a professor of economics at Princeton University and former vice chairman of the Federal Reserve, told ABC News.
“The dropping of rates to the floor was both necessary and appropriate, and in a real sense, obvious,” Blinder said.
A bout of acute inflation soon took hold, however, emerging as a result of a supply shortage imposed by the COVID-19 pandemic and exacerbated by the Russia-Ukraine war. Powell initially downplayed the price increases, describing them as “transitory.” It proved a consequential mistake -- and Powell would later admit his error.
Annual inflation peaked at a 40-year high of 9.1% in June 2022. By then, Powell had begun to ratchet up interest rates and it would continue over the following year. The aggressive series of rate hikes put the central bank’s benchmark rate at its highest level since 2001. The move sent mortgage and credit card rates soaring.
By June 2023, annual inflation had plummeted to 3%, but Americans remained widely dissatisfied with price increases long afterward. Many economists forecast a recession and the type of job losses it typically entails. Fortunately, the downturn never came to pass.
"Inflation stayed high for too long but once it came down, it came down really fast. It came down without creating unnecessary pain in the labor market," Wendy Edelberg, director of the Hamilton Project and senior fellow in economic studies at the Brookings Institution, told ABC News.
In September 2024, less than two months before the presidential election, the Fed cut interest rates by 0.5%. The decision drew criticism from allies of Trump, who considered the move a potential boost for the economy that would benefit incumbent Democrats. Trump went on to win the election.
Within weeks of his return to the White House, in early 2025, Trump voiced public criticism of Powell, urging him to cut interest rates. The attacks intensified criticism of Powell that had begun in Trump’s first term.
Over the ensuing months, Trump began to slam Powell for cost overruns in a renovation project at the Fed’s headquarters in Washington, D.C. Last July, Trump made the first official trip to the Fed by a sitting president in almost 20 years, donning a hard hat as he toured the renovation with Powell.
The Fed attributed spending overruns to unforeseen cost increases, saying that its building renovation would ultimately "reduce costs over time by allowing the Board to consolidate most of its operations," according to the central bank's website.
By January, the Department of Justice had opened a criminal investigation into Powell, ratcheting up an extraordinary clash between the White House and the Fed. It was the first criminal probe of a Fed chair in the 113-year history of the central bank.
The probe centered on Powell’s testimony to Congress last year about the cost overruns. Powell issued a rare video message rebuking the investigation as a politically motivated effort to influence the Fed's interest rate policy.
"No one -- certainly not the chair of the Federal Reserve -- is above the law," Powell said. "But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure."
Trump previously denied any involvement in the criminal investigation. The DOJ moved to drop its criminal probe into Powell last month. Washington U.S. Attorney Jeaninne Pirro said the investigation into the office renovation would be taken up by the Fed’s inspector general.
“The attack on the Fed chair was appalling,” Rebel Cole, a professor of finance at Florida Atlantic University who formerly worked at the Federal Reserve, told ABC News. “Powell stood up to it.”
Warsh, a former Fed official, will serve a 4-year term as chair. He is set to lead the Fed in a challenging period for central bank policymakers.
Inflation rose for a second consecutive month as the U.S.-Israeli war with Iran continued to send gasoline prices surging in April, government data on Tuesday showed. Annual inflation jumped to its highest level in three years, according to the U.S. Bureau of Labor Statistics.
Despite the disruption, some measures of economic health have proven resilient.
The unemployment rate held steady at a historically low level of 4.3% in April, leaving it little changed from when Powell began his tenure in 2018.
"The economy is pretty good but far from perfect," Blinder said, faulting Powell in part for elevated inflation, while attributing much of the blame to the Iran war. At the same time, Blinder praised Powell for his commitment to the independence of the Fed.
"That's the legacy that Warsh is inheriting," Blinder said.
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(NEW YORK) -- Hiring slowed in April as a rise in fuel prices hammered shoppers weeks into the war with Iran, U.S. government data on Friday showed.
The U.S. added 115,000 jobs in April, according to the report, which marked a cooldown from 178,000 jobs added in March. The reading for April exceeded economists' expectations.
The unemployment rate held steady at 4.3% in April, the Bureau of Labor Statistics (BLS) said. Unemployment remains low by historical standards.
The U.S. Bureau of Labor Statistics (BLS) collected the previous month's survey data through the second week of March, before the full effects of the oil shock set off by the war.
As in previous months, the health care industry stood out as a top source of hiring in April, adding 37,000 jobs, the BLS said. The retail sector, as well as transportation and warehousing, also contributed to the increase in hiring.
Employment in the federal government continued to decline in April, shedding 9,000 jobs, the BLS said. The federal government has lost 348,000 jobs, or nearly 12% of its workforce, since October 2024, a month before President Donald Trump was elected.
The hiring figure for March was revised upward from 178,000 jobs added to 185,000 jobs added. Hiring for February, however, was revised downward from a loss of 133,000 jobs to a loss of 156,000 jobs.
The fresh data arrived as the war continues to drive up gasoline prices and borrowing costs, threatening a drag on the economy.
The U.S. added an average of about 15,000 jobs per month in 2025, BLS data showed. That performance indicated a drop-off from 186,000 jobs added each month in 2024.
The Middle East conflict, which began on Feb. 28, prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil.
The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.
The price of an average gallon of gas stands at $4.54 as of Friday, marking an increase of $1.56 per gallon since the war started, AAA data showed. That amounts to a roughly 50% jump in about two-and-a-half months.
In theory, a prolonged oil shortage could drive up prices for a vast array of goods, sapping energy from consumer spending, which powers most of the nation’s economic growth.
A potential jump in costs for additional goods delivered through the Strait of Hormuz -- such as fertilizer and diesel fuel -- could also raise prices beyond gasoline, putting pressure on the Federal Reserve to hike interest rates in an effort to quell inflation.
Last month, Fed Chair Jerome Powell described the economic outlook as "highly uncertain."
"We're kind of waiting to see what happens with events in the Middle East," Powell said.
The Fed has opted to hold interest rates steady at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.
The benchmark interest rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking a slowdown in hiring.
Markets peg a roughly 70% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool.
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(NEW YORK) -- Apple has agreed to settle a class-action lawsuit for $250 million after the tech giant was accused of marketing Apple Intelligence technologies that "did not exist" yet, according to a Tuesday court filing.
The settlement paves the way for payouts of up to $95 for iPhone users who purchased eligible devices between June 10, 2024, and March 29, 2025.
Plaintiffs in the suit asked a judge on Tuesday to approve the settlement, which they described as "within the range of what is fair, reasonable, and adequate," according to the filing.
The settlement will provide class members up to $95 per device, "depending on claim volume and other factors," the filing states.
The lawsuit, which was originally filed in March 2025, alleged the iPhone manufacturer "violated consumer protection laws when it advertised its new generation of iPhones as a breakthrough in artificial intelligence ('AI'), including significant enhancements to Siri, iPhone's digital assistant," according to Tuesday's court filing.
The lawsuit itself specifically accused Apple of introducing Enhanced Siri capabilities -- such as AI-powered digital assistant recollection and calendar reminders -- even though they "did not exist or were materially misrepresented."
The plaintiffs also alleged Apple "saturated the market with deceptive ads" promoting that technology, which were "viewed widely by the Public" online and in ad spots during major broadcast events. They alleged that promotion led consumers to buy iPhones due to the perception that Siri had some of those enhanced AI features.
According to Tuesday's settlement document, Apple has "maintained that its ads were not misleading because it disclosed from the outset the Apple Intelligence features would be delivered over time and continue to evolve."
The company also "maintained that it successfully delivered more than 20 Apple Intelligence features" and argued that "consumers purchase new iPhones for any number of reasons that have nothing to do with Enhanced Siri features," the settlement document states.
An Apple spokesperson confirmed the settlement in a statement to ABC News on Wednesday.
"Since the launch of Apple Intelligence, we have introduced dozens of features across many languages that are integrated across Apple's platforms, relevant to what users do every day, and built with privacy protections at every step," the spokesperson said. "These include Visual Intelligence, Live Translation, Writing Tools, Genmoji, Clean Up and many more."
They added, "Apple has reached a settlement to resolve claims related to the availability of two additional features. We resolved this matter to stay focused on doing what we do best, delivering the most innovative products and services to our users."
The settlement payout applies to a list of iPhone 15 and 16 devices, including the iPhone 16, iPhone 16e, iPhone 16 Plus, iPhone 16 Pro, iPhone 16 Pro Max, iPhone 15 Pro or iPhone 15 Pro Max, according to Tuesday's filing.
The document notes there are approximately 37 million eligible devices.
The settlement will apply to those who purchased the eligible devices and "who reside in the United States and purchased an Eligible Device in the United States for purposes other than resale," according to the document.
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(NEW YORK) -- Sky-high gasoline prices are hammering drivers across the United States as the Iran war chokes off global oil supply. California, however, may be feeling the sting more than anywhere else.
The average price of a gallon of gasoline in California clocks in at $6.13, standing 36% higher than the national average, AAA data showed. Some elected officials in the state have warned of a potential oil and gas shortage that could push prices up even further.
Siva Gunda, the vice chairman of the California Energy Commission, on Tuesday said at a hearing of the state assembly that California retains enough gasoline to satiate demand over the coming weeks.
"I do not see presently -- at least up to six weeks -- a supply shortfall," Gunda said. "Beyond that, based on what we're hearing from the industry and what we've observed, the pricing will move molecules to California, but it will come at a price."
David Alvarez, a Democratic California state assembly member who represents Southern San Diego, warned of the potential impact on consumers.
"For six weeks, at least, there seems to be some certainty. But almost as certain is if this situation continues after six weeks, we would likely see some price increases," Alvarez said.
Fuel prices in California typically run higher than other states, even in the best of times. That usual price disparity stems from regulations and taxes imposed in the Golden State, among other factors.
The Iran war has exacerbated the price pressure, exposing California's dependence in large part on foreign imports, some analysts said. A shutdown of some key oil refineries in recent months worsened California's vulnerability, slashing the state's gasoline output in the absence of alternative fuel sources.
Still, the drop-off in gas supply is unlikely to produce a shortage of product at local gas stations, since an ongoing surge in prices should deter some buyers, analysts said. Under such a scenario, known as "demand destruction," high prices make gas unaffordable for some drivers, forcing them to forgo gasoline use altogether.
"A shortage within the continental U.S. would take a really extreme situation, since prices respond to supply and demand," Susan Bell, a senior vice president at the consulting firm Rystad Energy, told ABC News.
The Middle East conflict, which began on Feb. 28, prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil. As a result, global oil prices have soared more than 50%.
The vast majority of oil that passes through the strait is bound for Asian markets, but some of it reaches the United States, including California. That dependence has worsened a widely felt problem: since oil prices are set on a global market, prices have climbed for just about everyone as buyers chase fewer barrels of crude.
California imports about three-quarters of its oil from foreign nations and Alaska, California Energy Commission (CEC) data shows. Roughly 30% of the state's oil comes from the Middle East, especially Iraq and Saudi Arabia, according to the agency.
"California is challenged buying crude oil because they did buy from the Middle East," Bell said.
The oil bottleneck has driven up the price of crude, straining the state's supply chain. But the shortfall of gasoline in the state owes primarily to a decline in the availability of refined products, some analysts said.
California ships in a portion of its auto fuel from Asia, but those imports have been disrupted by the war, they added.
The shutdown of two major oil refineries in recent months has diminished the state's ability to make up for the lost gasoline with in-state production, they added. A longstanding absence of adequate pipeline infrastructure connected to other states, meanwhile, has prevented California from turning to domestic supply.
Gasoline inventory in the state averaged 9.55 million barrels over the four weeks ending on April 24, CEC data shows. That figure puts inventories near the lowest level on record dating back to 2005, according to a Reuters analysis. That total stock includes non-California gasoline, blending components and California's gasoline blend.
"California has designed an energy island in terms of the products we actually use. We're not connected to the rest of the U.S. as efficiently as many other states are," Paasha Mahdavi, a professor of energy governance and political economy at the University of California, Santa Barbara, told ABC News.
As a result, Mahdavi added: "There's a crunch hitting gas stations."
Despite the supply squeeze, California is unlikely to suffer from long lines at gasoline stations or customers leaving with empty tanks, some analysts said.
Rather, the price of gasoline will continue to move up, reaching such heights that some buyers will turn to alternatives or simply go without fuel, Severin Borenstein, a professor of Business Administration and Public Policy at the University of California, Berkeley, told ABC News.
If public officials were to put a price cap on gasoline, then customers would likely flock to the pump and empty inventories, Borenstein added. As prices surge, however, customers will fall out of the market instead.
"We don't have any gas lines because we don't regulate the price of gas," Borsenstein told ABC News. "As much as people hate high gas prices, they hate gas lines even more."
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