Rising energy prices, supply shortages and concerns about inflation have once again upset investors, causing US stocks to fall and oil prices to skyrocket.
The S & P 500 fell 1.23% (55.37 points) to close at 4456.24, and the Dow Jones Industrial Average fell 1.29% (448.96 points) to 34358.50. The Best Equity Index is 6.6% off the record closing price hit on January 4, down 5.4% annually. The technology-focused Nasdaq Composite fell 1.3% (186.21 points) to 13922.60.
Investors avoided fears that inflation would push the country’s economy into recession, leading to a sharp rise on Tuesday’s major US stock indexes. But on Wednesday, some of its confidence diminished after the international oil benchmark Brent crude rose again.
Brent crude futures rose $ 6.12 a barrel (5.3%) to $ 121.60. This is the third highest payment amount this year and the highest since March 8th. Concerns about supplies from Russia’s invasion of Ukraine.
In addition to Wednesday’s concerns, Russia said on Tuesday that oil exports from Kazakhstan to the Black Sea could temporarily decline by about 1 million barrels per day due to storm damage. Stated. Repairs can take up to two months, according to Russian officials.
“Things will continue to be very sensitive to what’s happening in Ukraine,” said Susannah Streeter, senior investment and market analyst at Hargreaves Landsdown, with sharp fluctuations in energy prices. He pointed out that it will continue to have a significant impact on the index. “There is still real pressure on oil prices that is fueling inflationary concerns,” she said.
Products have skyrocketed across various issues that could put pressure on the supply chain. Comex copper rose 1.6% to $ 4.76 a pound, the fifth highest closing price to date, rising 6.9% annually.
Prices for aluminum, nickel and steel have also risen due to concerns ranging from the war in Ukraine to the blockade of Covid-19 in China. Tangshan, China’s largest steelmaking city, has told residents to stay home due to the surge in Covid-19, according to Reuters. London’s commodity broker SP Angel said in a note Wednesday that the city accounts for 58% of China’s steel production.
“Inflation is still a £ 800 gorilla,” said Doug Sandler, Global Strategy Officer, RiverFront Investment Group. The concern, he said, is that rising prices will force the Fed to raise interest rates faster than investors had previously expected.
Sandler said his company began cutting stock holdings earlier this year amid concerns about a more risky and more uncertain environment for the US and global economies. He said he hopes that supply chain problems that have pushed prices up from corn to copper will be resolved in the coming months, reducing the need for sharply high federal funds rates.
The sharp rise in US Treasury yields has stopped. Yields on 10-year Treasuries fell from 2.375% the day before to 2.320%. Yields on U.S. government bonds have fallen this week after Federal Reserve Chair Jerome Powell said he was ready to raise interest rates in half-percentage steps if the central bank needed to curb inflation. It soared. When bond prices go down, yields go up.
On Wednesday, there were other signs that investors were looking at assets they perceived to be safer. The WSJ Dollar Index, which tracks currencies against other baskets, rose 0.11%. Gold rose 0.8%.
Russia’s stock market is expected to partially reopen on Thursday, almost a month after it was closed following the invasion of Ukraine. Investors and analysts anticipate that the reopening could lead to a free fall in Russian stocks.
Recently, the global market seemed to be cornered, despite rising inflation and concerns about the war in Ukraine. As Russia’s attacks on Ukraine intensify, recent backlash continues, Western nations continue to impose sanctions, and price pressures are showing no signs of diminishing. According to the latest data on inflation on Wednesday, consumer prices in the UK in February rose 6.2% year-on-year from 5.5% in January, the highest since March 1992.
Fari Hamzei of Hamzei Analytics said the recent stock price rebound was small, indicating that it could be the so-called bear market rebound.
Hamsey is looking for a significant fall in the next few days, with 90% of New York Stock Exchange shares falling. This is an indication of a purchase opportunity. On Wednesday, approximately 4.54 billion shares were handed over to the New York Stock Exchange. This is the lowest amount since February 16th.
“We have never seen surrender,” he said. “You need a volume to see the price action.”
Soaring oil prices can cause such a fall. Brent’s US counterpart, WTI Crude, is expected to rise 5.2% to $ 114.93 on Wednesday, jumping from $ 135 to $ 145 per barrel, Hamsey said. A significant expansion of the conflict in Ukraine could also drive investors out of stocks, he said.
The consequences of severe economic sanctions on Russia are already felt around the world. The WSJ’s GregIp will work with other experts to explain the importance of what has happened so far and how conflicts can change the global economy.Photo Illustration: Alexander Hotts
Soaring oil prices could raise consumer interest in electric vehicles, analysts said. Tesla’s share price rose 0.5%, or $ 5.13, to $ 999.11, rising for the seventh straight day. This has brought EV makers up 30.4% during that period.
Meanwhile, the meme stock, which fell sharply this year, has revived. GameStop shares rose 14.5% ($ 17.86) to $ 141.00 after the company’s chairman Ryan Cohen announced on Tuesday that he had bought 100,000 shares in the company. AMC Entertainment Holdings shares, which tend to move in correlation with GameStop, rose $ 13.6% or $ 2.48 to close at $ 20.74.
Adobe’s share price fell 9.3% ($ 43.55) to $ 422.90. The software company reported high profits and higher-than-expected earnings growth on Tuesday, but said it expects the war in Ukraine to hurt annual earnings.
Traders worked on the floor of the New York Stock Exchange on Tuesday.
Photo: BRENDAN MCDERMID / REUTERS
In the European market, the Stocks Europe 600 fell 1.1%, and a strong rise in oil prices wiped out the previous rise. London’s FTSE 100 fell 0.1%.
In Asia, major indices have risen. The Hang Seng Index in Hong Kong rose 1.2% and the Nikkei 225 in Japan rose 3%. China’s Shanghai Composite rose 0.3%.
—Georgi Kantchev contributed to this article.
Write to Caitlin McCabe ([email protected]) and Scott Patterson ([email protected]).
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