Stocks open lower, oil prices jump as trade remains volatile
U.S. stocks fell in early trading as oil prices rose sharply as investors watched developments in Russia’s invasion of Ukraine and the possibility of central banks raising interest rates. interest despite economic uncertainty.
The S&P 500 fell about 0.8% on Thursday, while the technology-focused Nasdaq Composite Index fell 1.2%. The Dow Jones Industrial Average was about 0.6% lower, or 184 points. All three indexes snapped a four-game losing streak on Wednesday, when oil prices fell from recent highs but remained above $100 a barrel.
Investors are worried about the global economic outlook, sapping their appetite for riskier assets in recent days. The S&P 500 and Dow industrials remain in correction territory, while the Nasdaq is in a bear market.
US inflation hit a new four-decade high in February, with the consumer price index rising 7.9% from a year earlier. Gasoline prices at the pump are hitting new highs, hurting consumers’ budgets. Analysts are warning investors that the United States and Europe could see sustained inflation and weaker economic growth, also known as stagflation, as high energy prices erode household spending on other items.
White House press secretary Jen Psaki lashed out Wednesday night at Russian claims that the United States was developing chemical weapons in Ukraine, warning it could be a pretext for Moscow to use its own these weapons. Some analysts said worries about it may have added to market jitters on Thursday.
On Thursday, Brent futures, the global oil benchmark, rose 2.7% to $114.19 a barrel. The US equivalent, West Texas Intermediate, added 1.9% to $110.80.
In individual stocks, shares of Amazon.com rose 4.3% after the e-commerce giant’s board approved a 20-to-1 stock split and cleared the buyout of up to $10 billion of common stock. Peloton shares fell 3.3% after the company announced it would revise its pricing strategy.
Overseas, the pan-continental Stoxx Europe 600 index fell 1.7%, after posting its biggest daily percentage gain since March 2020 on Wednesday. The banking sector in the index fell 2.1% on Thursday, as investors worry about the European economy’s exposure to Russia.
“Yesterday, there was this rally and already we are seeing profit taking. There is very little conviction in this market,” said Agnès Belaisch, chief European strategist at Barings Investment Institute.
The European Central Bank kept its key rate unchanged, but indicated that it could end its asset purchase program in the third quarter, earlier than expected. Investors expect the end of this program to open the door to higher interest rates. The euro gained 0.2% against the dollar after the announcement, before trading flat.
If concerns about inflation outweigh fears of economic weakness, the central bank is more likely to raise interest rates, said Samy Chaar, chief economist at Lombard Odier.
“Looking at the statement, it seems relatively clear that inflation risk dominates,” he said.
Eurozone bond yields jumped after the announcement. Yields on German 10-year Bunds rose to 0.284% from 0.206% on Wednesday. Italian 10-year bond yields climbed to 1.902% from 1.677% on Wednesday. Yields and prices move in opposite directions.
In the United States, the yield on the benchmark 10-year Treasury note rose to 1.976% from 1.946% on Wednesday.
Russia’s invasion of Ukraine has injected volatility into stocks, bonds, commodities and currencies, as investors try to assess the impact of sanctions and the potential for disruptions to trade and supply chains.
The Russian ruble was trading near 118 rubles to the dollar in offshore trading on Thursday, after strengthening against the greenback from Wednesday, according to FactSet..
Assessing the value of the ruble has become difficult over the past two weeks as it has become more difficult for banks to execute orders, following Western sanctions and capital controls imposed by Russia. The Russian stock exchange has remained closed since February 25.
Bitcoin’s dollar value fell more than 6% on Thursday from its 5 p.m. ET Wednesday level at $39,062.31. The world’s largest cryptocurrency by market value rallied on Wednesday when President Biden announced an executive order to study digital currencies, a move hailed by the industry and decried by skeptics as delaying needed regulation. Bitcoin’s dollar value tends to follow broader stock markets, revealing industry-specific news, analysts say.
Major benchmark stock indices in Asia tracked Wall Street’s gains from Wednesday. China’s Shanghai Composite rose 1.2% on Thursday, South Korea’s Kospi jumped 2.2% and Japan’s Nikkei 225 jumped 3.9%.
—Orla McCaffery contributed to this article.
Write to Caitlin Ostroff at [email protected]
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