Stocks slip, oil slides as US releases crude reserves
The move to pump more oil into the market is part of an effort to control energy prices, which are up roughly 40% globally this year.
The S&P 500 fell 0.4% as of 1: 09 p.m. Eastern. The Dow Jones Industrial Average fell 194 points, or 0.6%, to 35,034 and the Nasdaq fell 0.6%.
“This was a small give back today after the big run, but we’re still hanging in there pretty well,” said Scott Wren of Wells Fargo Investment Institute, senior global market strategist.
There were slightly more stocks falling than rising within the benchmark S&P 500 and much of the movement seemed like a “consolidation” for investors, Wren said. Major indexes lost ground on Wednesday, ending a four-day winning streak.
Technology and communications stocks were among the biggest weights on the market. Many companies in these sectors have high stock values, which tend to give the wider market a stronger push up or down. Chipmaker Intel saw its stock value fall 2.6%, while Netflix saw its stock price drop 1.4%.
Banks also declined along with bond yields. This forces interest rates on loans to be lower, making banks lending less profitable. The yield on the 10-year Treasury slipped to 2. 33% from 2. 36% late Wednesday. Citigroup fell 1.7%.
U.S. U.S. crude oil prices fell 4.1% while Brent, the international standard for oil, fell 3.5%. The pullback helped to reduce the soaring oil prices that had been caused by Russia’s invasion in Ukraine. There are concerns that tightened oil supplies will only make things worse for consumers and businesses worldwide.
An inflation gauge from the Commerce Department jumped 6.4% in February compared with a year ago, marking the largest year-over-year rise since January 1982.
Energy prices are a key factor in driving inflation higher. Biden’s plan for more oil to be released into the system is not expected to provide any relief from OPEC, the world’s largest oil cartel. Russia and its allies, including the cartel, are sticking to a modest rise in crude oil they send to the world. This supports higher prices.
Higher food and energy prices have been a major concern for central banks around the world, who are raising interest rates to mitigate the impact. Investors are trying to gauge how the economy and companies will do in the face of rising inflation, higher interest rate, and other factors. This has led to a difficult start to the year.
The benchmark S&P 500 is on track to close out the month of March with a 4.7% gain following losses in January and February. The index is on track for a first-quarter loss of 3.9%, marking its first quarterly loss since the the first quarter of 2020, when the pandemic stunned global markets and the economy.
Investors received a lukewarm update on the job market on Thursday. While more Americans applied for unemployment benefits last Wednesday, layoffs are still at historic lows. Wall Street will receive a more complete report Friday when the Labor Department releases March employment data.
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