Oil prices jumped to market-shaking levels but then eased back late in the day, helping Wall Street to pare its losses. The S&P 500 fell 0.3% Thursday after trimming an earlier drop of 1%. The Dow Jones Industrial Average lost 0.4%, and the Nasdaq composite fell 0.3%. Stocks fell much more in Europe and Asia after the price of Brent crude briefly topped $119 per barrel but before oil prices pared their gains late in the day. They're the latest manic swings for oil prices and stocks since the war in Iran raised worries about production troubles in the Middle East.
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The Federal Reserve kept its key interest rate unchanged Wednesday and Chair Jerome Powell highlighted the increasingly uncertain outlook for the U.S. economy and inflation in the wake of the Iran war, suggesting the Fed could stand pat for an extended period. Fed policymakers maintained their forecast for an additional rate cut this year, but in a news conference, Powell suggested that the central bank remains concerned about inflation that was still stubbornly elevated even before the conflict’s impact on gas prices.
U.S. stocks slumped after a report said inflation was primed to worsen even before the war with Iran sent oil prices spiking. That and comments from the head of the Federal Reserve pushed Wall Street on Wednesday to see less chance of getting the lower interest rates that it loves. The S&P 500 fell 1.4% for its first loss this week. The Dow Jones Industrial Average dropped 1.6%, and the Nasdaq composite slid 1.5%. Treasury yields climbed in the bond market, which hurts prices for all kinds of investments. Gold fell back below $5,000 per ounce.
Wholesale inflation comes in hot for February with producer prices rising 3.4%, the biggest jump in a year.
The Iran war has scrambled the Federal Reserve’s outlook on inflation and unemployment and will likely further delay interest rate cuts this year, putting off any relief for consumers struggling with high borrowing costs for home and car purchases. The spike in oil and gas prices presents already-divided Fed officials with a worst-case scenario as they conclude a key meeting Wednesday. Costlier gas will raise inflation in the short run, which typically causes the central bank to raise borrowing costs — or at least leave them unchanged. Yet if the spike is high enough or lasts long enough, it could hammer the economy and push up unemployment, which the Fed would typically respond to by cutting its key rate.
A drop in oil prices helped send the U.S. stock market to its best day since the war in Iran began. The S&P 500 climbed 1% Monday for its biggest gain in five weeks. The Dow Jones Industrial Average added 0.8%, and the Nasdaq composite jumped 1.2%. The price for a barrel of benchmark U.S. crude fell toward $93 after topping $102 in the morning. The fall in oil prices not only helped boost stocks of companies with big fuel bills but also helped Treasury yields ease in the bond market. The S&P 500 pulled back to just 4% below its record.
About 3,800 workers for the world’s largest meatpacking company began striking Monday. If they don’t get a new contract soon, already costly beef could become even more expensive for U.S. consumers. The walkout at the Swift Beef Co. plant in Greeley, Colorado, comes after the union said 99% of the workers voted to authorize the strike, seeking higher wages and better health care. Swift Beef owner JBS USA says it complies with labor and employment laws and any employee who doesn’t strike will have work and be paid. Union officials say the company's offer of 2% wage hikes is less than inflation. The company says its offer is fair.
Wall Street’s losses deepened as the ongoing fallout from the war in Iran keeps pushing oil prices higher, ratcheting up inflationary pressure on the global economy. After briefly easing early Friday, crude oil prices rose again, bringing the benchmark oil price back above $100 a barrel. The S&P 500 fell 0.6%. The Dow Jones Industrial Average lost 0.3% and the Nasdaq composite dropped 0.9%. A measure of inflation closely monitored by the Federal Reserve moved higher in January, even before the war with Iran sent energy prices higher.
An inflation gauge closely monitored by the Federal Reserve moved higher in January in the latest sign that prices were persistently elevated even before the Iran war caused spikes in oil and gas costs. Prices rose 2.8% in January compared with a year earlier, the Commerce Department said Friday. And excluding the volatile food and energy categories — which the Fed pays closer attention to — core prices rose 3.1%, up from 3% in the prior month and the highest in nearly two years.
Key inflation gauge worsened in January, before Iran war lifted gas prices.