May 16, 2022

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Dow drops more than 400 points, oil prices jump

Dow drops more than 400 points, oil prices jump

US stocks tumbled and oil prices jumped, as concerns about high energy prices, supply shortages and inflation once again rattled investors.

The S&P 500 was down 1.2% on Wednesday as of 4PM ET, while the Dow Jones Industrial Average was down 1.3%, or 450 points. The technology-focused Nasdaq Composite Index is down 1.3% recently. Major US stock indexes jumped on Tuesday, as investors ignoring fears Inflation will push the nation’s economy into recession.

However, some of that confidence faded on Wednesday after Brent crude, the international benchmark, rose again. Brent crude futures rose $6.12 a barrel, or 5.3%, to $121.60, the third-highest settlement value this year and the highest level since March 8. Brent crude is up 56% this year as the global economy expands as the coronavirus pandemic fades. and concerns about supplies due to the Russian invasion of Ukraine.

Adding to those concerns Wednesday: Russia said on Tuesday that oil exports via a pipeline extending from Kazakhstan to the Black Sea may fall temporarily At about 1 million barrels per day – representing about 1% of global oil demand – indicating storm damage. Russian officials have said the repairs could take up to two months.

“Things will remain highly sensitive to current events in Ukraine,” said Susanna Streeter, senior investment and markets analyst at Hargreaves Lansdown, noting that sharp moves in energy prices will continue to weigh heavily on indices. “There is still real pressure on oil prices, adding to inflationary concerns.”

goods They gravitate higher across the board about a host of problems that threaten to narrow supply chains. Comex Copper stock rose 1.6% to $4.76 a pound, the fifth-highest close in history, bringing it up 6.9% for the year.

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Aluminum, nickel and steel prices also rose on concerns ranging from the war in Ukraine to the Covid-19 lockdowns in China. Tangshan, the largest steelmaking city in China, Tell residents to stay home According to Reuters. London commodities broker SP Angel said in a note on Wednesday that the city accounts for 58% of China’s steel sector production.

“Inflation continues to be an 800-pound gorilla,” said Doug Sandler, global head of strategy at Riverfront Investment Group. The concern, he said, is that higher prices will force the Federal Reserve to raise interest rates faster than investors previously expected.

Mr. Sandler said his company began reducing its stock of stocks earlier this year amid concerns about a riskier and more uncertain environment for the US and global economy. The hope, he said, is that the supply chain issues that have raised prices for everything from corn to copper will work themselves out in the coming months, reducing the need for sharply higher rates on federal funds.

The sharp rise in US government bond yields has paused. The yield on the 10-year US Treasury fell to 2.320% from 2.375% the day before. US government bond yields rose this week after Federal Reserve Chairman Jerome Powell said the central bank is ready Raise interest rates in steps of half a percentage point If necessary to tame inflation. Yields rise when bond prices fall.

There were other signs on Wednesday that investors were eyeing the assets they saw as safer. The ICE US Dollar Index, which measures the currency against another basket, rose 0.4% in recent trading. Gold prices rose 0.8%.

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Stock market in Russia Set to partially reopen on Thursday, nearly a month after trading closed after the country’s invasion of Ukraine. Investors and analysts predict that the reopening could push Russian stocks into freefall.

In recent days, global markets appeared to have crossed the curve, despite concerns about it soaring inflation The war in Ukraine. The S&P 500 rose above its 200-day moving average on Tuesday after falling below it on February 17. The benchmark has advanced 1% or more in five of the past six sessions, lifting it 8.1% over that period and erasing everything. Of the losses that have occurred since Russia invaded Ukraine.

Major indices in Europe and Asia saw similar moves.

The latest march came even as Russia launched attacks on Ukraine IntensificationWestern countries Penalties continue to pile up Pricing pressures are showing no signs of abating. On Wednesday, new data on inflation showed that UK consumer prices It rose 6.2% in February from a year earlier, up from 5.5% in January, marking the highest rate since March 1992.

Fari Hamzei, of Hamzei Analytics, said the recent bounce in stocks came in lower volumes, suggesting it could be a so-called bear market rally. He’s looking for a few days of big dips in which 90% of NYSE stocks are down, indicating a buying opportunity.

He said, “We have not seen a surrender.” “You need volume to confirm price action.”

A sharp rise in oil prices could lead to such a drop. Mr. Hamza expects the price of West Texas Intermediate crude, which traded at around $114 a barrel on Wednesday, to rise to between $135 or $145 a barrel. He said a significant escalation of the conflict in Ukraine could push investors out of stocks.

The effects of harsh economic sanctions against Russia are already beginning to be felt around the world. Greg Ebb of the Wall Street Journal joins other experts to explain the significance of what has happened so far and how the conflict can transform the global economy. Photo illustration: Alexander Hotz

In afternoon trading in New York, energy stocks were also higher.

ExxonMobil

And the

chevron

It gained about 1.6% and 1.1%, respectively.

Rising oil prices could spark more Consumer interest in electric carsAnalysts said. shares

Tesla

It rose about 0.5%. The stock has risen on each of the past seven trading days, its longest winning streak since August 2021, lifting the electric car maker more than 30% in that time period.

Meanwhile, he shares Mimi stock –Which has greatly decreased this year– I enjoyed life back. shares

Jim Stop

It jumped 14.5% after the company’s president, Ryan Cohen, revealed it His company bought 100,000 shares of the company’s stock on Tuesday. shares

AMC Entertainment HoldingsAnd the

Which tends to move in relation to GameStop, jumped 14%.

shares

Adobe

It fell 9.3%. The software company on Tuesday reported higher earnings and better-than-expected revenue growth, but said it expected a hit in annual revenue from the war in Ukraine.

Traders worked on the floor of the New York Stock Exchange on Tuesday.


Photo:

Brendan McDermid/Reuters

In European markets, the Stoxx Europe 600 lost 1.1%, reversing earlier gains once oil prices rose strongly. The FTSE 100 in London was down 0.1%. European oil giants

seashells

And the

BP

All of them rose 3.3% or more.

In the European bond markets, the yield on the benchmark German 10-year bond was trading around 0.497% after exceeding 0.5% this week. The last time he traded around that level was in the fall of 2018.

In Asia, the major indices closed higher. Hong Kong’s Hang Seng rose 1.2%, while Japan’s Nikkei 225 climbed 3%. China Shanghai Composite advanced 0.3%.

—Georgi Kanchev contributed to this article.

Write to Caitlin McCabe at [email protected] and Scott Patterson at [email protected]

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