Stocks slide on Wall Street as oil and inflation concerns mount – Press Enterprise

By STAN CHOE

NEW YORK (AP) – Stocks tumbled on Wall Street on Thursday as global markets remain jittery amid uncertainty about where inflation, interest rates and the global economy are headed.

The S&P 500 tumbled 1.2% in morning trade, its fifth drop in the past six days. This marks another reversal for US stocks, which just a day earlier had rallied to their biggest gain since June 2020, when a collapse in oil prices appeared to take pressure off the world’s already high inflation.

Oil prices had their own swings Thursday morning, with a barrel of U.S. crude up as much as 5.7% before trading back and forth between gains and losses. It recently traded at $110.67, up 1.9%. The recent surge in energy prices has increased the risk that the economy will struggle under a toxic cocktail of persistently high inflation and slowing growth.

The reciprocations of oil were just some of the waves of reports that rocked markets worldwide. The European Central Bank said high inflation will force it to complete its bond-buying programme, which aims to boost its economy faster than expected. In the US, a report showed consumer prices rose 7.9% in February from a year earlier. It’s the sharpest rise since 1982, although the reading was largely within expectations.

Overall, the forces reversed many of the market moves from the previous day.

The Dow Jones Industrial Average fell 309 points, or 0.9%, to 32,978 at 10:35 a.m. Eastern Time. The Nasdaq Composite was 1.7% lower.

European stocks were hit even harder, with Germany’s DAX down 1.6% and France’s CAC 40 down 1.7%. Asian stocks were mostly higher earlier in the day.

Such swings have become common in recent weeks after Russia’s invasion of Ukraine raised concerns about how high prices for oil, wheat and other commodities produced in the region will rise. Markets were already on edge before the war broke out as high inflation is urging central banks to hike interest rates for the first time in years and halt programs put in place to support the global economy following the outbreak of the pandemic.

Analysts said the US inflation report, while eye-catching, is unlikely to have a major impact on markets. The 7.9% jump was exactly what economists had predicted. If anything, it may have brought some relief because it didn’t hit the 8% threshold, which might feel even worse.

The yield on the 10-year government bond, which tracks expectations for inflation and economic growth, collapsed immediately after the inflation report was released, but then fluctuated. It was up 1.99% recently, up from 1.94% late Wednesday.

The two-year Treasury yield, which relies more on expectations for near-term Federal Reserve interest rates, was 1.71% versus 1.68%.

The general expectation is that the Fed will hike its short-term interest rate by a quarter of a point next week, which would be the first since 2018. The recent rise in commodity prices has made it difficult for them to raise interest rates enough to avoid high inflation without plunging the economy into recession.

Brent crude, the international standard, rose 1.2% to $112.47 a barrel. Both it and the U.S. benchmark oil are up more than 44% so far for 2022, although they remain below the highs they set earlier this week. US oil briefly surpassed $130.

Expect continued market volatility in the coming days given the raging conflict in Ukraine. The foreign ministers of Russia and Ukraine meet in Turkey for talks.

“Markets seem to be clinging to some slightly less somber clues as an excuse for a hard rally,” ING economists said in a report. “The basis for this optimism is actually pretty thin.”

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AP business writer Joe McDonald contributed.