By STAN CHOE and ALEX VEIGA
NEW YORK (AP) — Stocks fell sharply on Wall Street Monday after one other massive leap for oil costs threatened to squeeze inflation’s grip on the worldwide financial system. The S&P 500 fell 3%, its largest drop in 16 months, after a barrel of U.S. crude surged to just about $120 on the likelihood that Washington may bar imports from Russia. Overseas markets additionally fell, taking their cue from oil’s actions. Oil costs had gone as excessive as $130 a barrel. Gold and a measure of nervousness on Wall Street additionally rose. The Dow Jones Industrial Average misplaced 2.4% and the tech-heavy Nasdaq gave up 3.6%.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows beneath.
NEW YORK (AP) — Stocks tumbled on Wall Street Monday as one other massive leap for oil costs threatens to squeeze inflation’s grip on the worldwide financial system.
The S&P 500 fell 2.7%, on tempo for its largest decline in 16 months, after a barrel of U.S. oil surged to $130 in a single day on the likelihood the U.S. may bar imports from Russia. Stocks all over the world slid much more sharply earlier within the day, additionally taking their cue from oil’s actions, although their losses moderated as crude receded towards $120 per barrel.
The Dow Jones Industrial Average was down 716 factors, or 2.1%, at 32,896, as of three:42 p.m. Eastern time, and the Nasdaq composite was 3.2% decrease. Stocks are on tempo for his or her worst losses since Russia invaded Ukraine.
Gold and a measure of nervousness on Wall Street have been additionally greater, although not by fairly as a lot as when oil costs hit their peak. The value of gold briefly touched $2,007.50 per ounce earlier than settling at $1,995.90, up 1.5%.
Oil costs have soared just lately on worries that Russia’s invasion of Ukraine will upend already tight provides. Russia is likely one of the world’s largest power producers, and oil costs have been already excessive earlier than the assault as a result of the worldwide financial system is demanding extra gas following its coronavirus-caused shutdown.
U.S. House Speaker Nancy Pelosi mentioned in a letter to her colleagues on Sunday that “the House is currently exploring strong legislation” to additional isolate Russia due to its assault on Ukraine. That may embody a ban on imports of Russian oil and power merchandise, she mentioned.
It’s a serious step that the U.S. authorities has not but taken, regardless of an extended checklist of strikes to punish Russia, because the White House has mentioned it hopes to restrict disruptions to grease markets. It needs to restrict value jumps on the gasoline pump.
Reports additionally mentioned U.S. officers could also be contemplating easing sanctions in opposition to Venezuela. That probably may unlock extra crude oil and ease considerations about lowered provides from Russia.
A gallon of normal already prices a median of $4.065 throughout the nation after breaching the $4 barrier on Sunday for the primary time since 2008. A month in the past, a gallon averaged $3.441, in response to AAA.
A barrel of U.S. crude oil settled at $119.40 per barrel, up 3.2%, after earlier touching $130.50. Brent crude, the worldwide commonplace, settled at $123.21 per barrel, up 4.3%, after earlier topping $139.
Markets worldwide have swung wildly just lately on worries about how excessive costs for oil, wheat and different commodities produced within the area will go due to Russia’s invasion, inflaming the world’s already excessive inflation. In the United States, costs for customers jumped final month from their year-ago stage on the quickest price in 4 a long time.
The battle in Ukraine additionally threatens the meals provide in some areas, together with Europe, Africa and Asia, which depend on the huge, fertile farmlands of the Black Sea area, referred to as the “breadbasket of the world.”
The conflict places further strain on central banks all over the world, with the Federal Reserve on target to lift rates of interest later this month for the primary time since 2018. Higher charges gradual the financial system, which hopefully will assist rein in excessive inflation. But if the Fed raises charges too excessive, it dangers forcing the financial system right into a recession.
“Their reaction to geopolitics can’t really be measured, so there’s uncertainty around that,” mentioned Sameer Samana, senior world market strategist at Wells Fargo Investment Institute.
Some traders have seen the conflict in Ukraine as probably pushing the Fed to go simpler on price will increase. Investors love low charges as a result of they have an inclination to spice up costs for shares and all types of markets.
But that will not essentially be the case this time, Goldman Sachs economists wrote in a report. With costs for oil, wheat and different commodities probably rising much more, the menace is greater for a sustained, excessive inflation to choose the financial system. That may flip the Fed’s conventional playbook.
“After several decades in which economic, financial, or political shocks invariably caused interest rates to fall, markets may have to re-learn that the opposite can also be true,” Goldman Sachs economist Jan Hatzius wrote.
Beyond sanctions introduced on Russia by governments due to its invasion of Ukraine, corporations are additionally levying their very own punishments. The checklist of corporations exiting Russia has grown to incorporate Mastercard, Visa and American Express, in addition to Netflix.
The worth of the Russian ruble continued to slip amid all of the monetary strain, falling 12% to 0.7 cents.
“The Ukraine-Russia conflict will continue to dominate market sentiments and no signs of conflict resolution thus far may likely put a cap on risk sentiments into the new week,” mentioned Yeap Jun Rong, market strategist at IG in Singapore.
“It should be clear by now that economic sanctions will not deter any aggression from the Russians, but will serve more as a punitive measure at the expense of implication on global economic growth. Elevated oil prices may pose a threat to firms’ margins and consumer spending outlook,” Yeap mentioned.
On Wall Street, shares of Bed Bath & Beyond soared after the funding agency of billionaire Ryan Cohen took a virtually 10% stake within the firm and advisable massive modifications. Cohen is the co-founder of Chewy, and he’s amassed considerably of a cult following after he took a stake in GameStop, the struggling online game chain that ultimately named him board chairman.
Shares of Bed Bath & Beyond jumped 33.6% to $21.59.
Treasury yields climbed, with the 10-year rising to 1.77% from 1.72% late Friday.
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AP Business Writers Damian J. Troise and Yuri Kageyama contributed. Veiga reported from Los Angeles.
Source: www.bostonherald.com”