Wall Street falls after oil prices hit $130 a barrel | Politics

NEW YORK (AP) — Stocks tumble on Wall Street Monday as another big jump in oil prices threatens to reduce inflation’s grip on the global economy.

The S&P 500 fell 2.3% after a barrel of US oil jumped to $130 overnight the possibility of the United States banning imports from Russia. Stocks around the world fell even more sharply earlier in the day, also taking inspiration from the moves in oil, although their losses moderated as crude retreated towards $120 a barrel.

The Dow Jones Industrial Average was down 628 points, or 1.9%, at 32,986 as of 12:19 p.m. EST, and the Nasdaq composite was down 2.2%. Stocks are poised for their worst losses since Russia invaded Ukraine.

Gold and some jitters on Wall Street were also higher, but not as high as when oil prices peaked. The price of gold briefly touched $2,007.50 an ounce before trading at $1,987.50, up 1.1%.

Oil prices have risen recently on fears that The Russian invasion of Ukraine will disrupt already tight supplies. Russia is one of the world’s largest energy producers, and oil prices were already high before the attack as the global economy demands more fuel after its coronavirus-caused shutdown.

U.S. House Speaker Nancy Pelosi said in a letter to her colleagues on Sunday that “the House is currently considering strong legislation” to further isolate Russia over its attack on Ukraine. This could include a ban on imports of Russian oil and energy products, she said.

It’s a major step that the US government has yet to take, despite a long list of measures to punish Russia, as the White House has said it hopes to limit disruptions to oil markets. He wants to limit price swings at the gas pump.

Reports have also indicated that US officials may consider easing sanctions against Venezuela. This could potentially free up more crude oil and ease concerns about dwindling supplies from Russia.

A gallon of regular already costs an average of $4.065 on the gallon after breaking the $4 barrier on Sunday for the first time since 2008. A month ago, a gallon averaged $3.441, according to AAA.

A barrel of U.S. crude oil was trading at $117.85 a barrel, up 1.8%, after hitting $130.50 earlier. Brent crude, the international standard, rose 3.6% to $122.34 a barrel after rising above $139 earlier.

Markets around the world have tumbled wildly recently on concerns over rising prices for oil, wheat and other commodities produced in the region due to Russia’s invasion, igniting inflation already high in the world. In the United States, prices for consumers jumped last month from their level a year ago at the fastest pace in four decades.

The conflict in Ukraine has also threatens food supply in some areasincluding Europe, Africa and Asia, which depend on the vast fertile agricultural lands of the Black Sea region, known as the “breadbasket of the world”.

The war is putting further pressure on central banks around the world, with the Federal Reserve set to raise interest rates later this month for the first time since 2018. Higher rates are slowing the economy, which will hopefully help curb high inflation. But if the Fed raises rates too high, it risks plunging the economy into a recession.

Some investors saw the war in Ukraine as potentially pushing the Fed to ease rate hikes. Investors like low rates because they tend to drive up the prices of stocks and all kinds of markets.

But that may not necessarily be the case this time around, Goldman Sachs economists wrote in a report. With the prices of oil, wheat and other commodities likely to rise further, the threat is greater that sustained and high inflation will take hold of the economy. This could upset the traditional Fed playbook.

“After several decades in which economic, financial or political shocks have invariably driven interest rates down, markets may need to relearn that the reverse can also be true,” wrote Jan Hatzius, economist at Goldman Sachs. .

Beyond the sanctions imposed on Russia by governments for its invasion of Ukraine, companies are also imposing their own sanctions. The list of companies leaving Russia has grown to include Mastercard, Visa and American Express, as well as netflix.

The value of the Russian ruble continued to decline amidst all the financial pressures, dropping another nearly 20%. It fell below 0.7 cents.

“The Ukraine-Russia conflict will continue to dominate market sentiment and any signs of a resolution to the conflict so far would likely limit risk sentiment in the new week,” Yeap Jun Rong, market strategist at IG told Reuters. Singapore.

“It should be clear by now that economic sanctions will not deter any aggression from the Russians, but serve more as a punitive measure at the expense of impacting global economic growth. High oil prices can pose a threat to corporate margins and consumer spending outlook,” Yeap said.

On Wall Street, shares of Bed bath and beyond soared after billionaire Ryan Cohen’s investment firm took a nearly 10% stake in the company and recommended big changes. Cohen is the co-founder of Chewy, and he gained something of a cult following after taking a stake in GameStop, the struggling video game chain that eventually named him chairman of the board.

Shares of Bed Bath & Beyond jumped 31.1% to $21.18.

Treasury yields climbed, with the 10-year rising to 1.74% from 1.72% on Friday night.

AP Business Writers Damian J. Troise and Yuri Kageyama contributed.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

About Troy McMiller

Check Also

Seoul shares open higher on easing uncertainty over Fed rate hikes

On Thursday, an electronic chart showing the Korea Composite Stock Price Index (Kospi) in a …