NEW YORK (AP) — U.S. stocks are slipping Wednesday as the price of oil gets back to rising.
The S&P 500 fell 0.4%, coming off a rare day of modest moves following a wild stretch caused by the war with Iran. The Dow Jones Industrial Average was down 455 points, or 1%, as of 11:45 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.
Since the start of the war, extreme moves for oil prices have triggered sharp swings up and down for financial markets worldwide, sometimes by the hour. Oil prices briefly spiked to their highest levels since 2022 this week because of the possibility that production in the Middle East could be blocked for a long time, which in turn raised worries about a surge of debilitating inflation for the global economy.
The International Energy Agency said Wednesday that its members will release a record amount of oil, 400 million barrels, from stockpiles they’ve set aside for emergencies. Such moves push downward on oil prices in the near term, but it’s likely that only a full resumption of the flow of oil and natural gas from the Persian Gulf area will fully ease the market. That has investors worldwide anxiously awaiting the end of the war.
The price for a barrel of Brent crude, the international standard, rose 4.4% to $91.68. A barrel of benchmark U.S. crude gained 5% to $87.58.
Worries are centered on the Strait of Hormuz, a narrow waterway off Iran’s coast where a fifth of the world’s oil sails on a typical day. The war has halted most of that traffic, which means storage tanks for crude in the region are filling up because the oil has nowhere else to go. That in turn is pushing oil producers to say they’re cutting their output.
The United States said it took out more than a dozen minelaying Iranian vessels Tuesday, and the Islamic Republic vowed to block the region’s oil exports, saying it would not allow “even a single liter” to be shipped to its enemies.
All this is happening at a time when inflation was already relatively high in the United States. A report released Wednesday showed that U.S. consumers paid prices for groceries, gasoline and other costs of living that were 2.4% higher in February than a year earlier.
To be sure, that inflation rate was the same as the prior month's and better than the 2.5% that economists expected, but it remains above the 2% target the Federal Reserve has set for the economy. It also doesn’t include the spike in gasoline prices that’s happened this month because of the war.
“Looking forward, we expect a spring bulge in inflation due to the spike in energy prices tied to the Iran war, the duration of which will dictate the landing spot for headline inflation by year end,” according to Gary Schlossberg, global strategist at Wells Fargo Investment Institute.
Source: WPLG
