Stocks rise on Wall Street as oil slides to $100 a barrel


NEW YORK (AP) — Stocks rise on Wall Street as waves of market driving forces collide and keep trading messy, from the war in Ukraine to an upcoming Federal Reserve meeting on interest rates .

The S&P 500 rose 0.7% in morning trade after the 10-year Treasury yield hit its highest level since the summer of 2019. The Dow Jones Industrial Average rose 353 points, or 1, 1%, at 33,297, as of 10:50 a.m. Eastern time, and the Nasdaq composite was virtually flat.

Elsewhere in the world, markets pulled in opposite directions. Inventories soared in Europe, while stocks fell sharply in Hong Kong after neighboring Shenzhen was ordered to shut down to battle China’s worst COVID-19 outbreak in two years. Oil prices have fallen to relieve high inflation sweeping the world, with a barrel of US crude falling towards $100 after hitting $130 last week.

Markets have crashed in recent weeks amid uncertainty over whether the economy could be heading for a toxic combination of stagnant growth and persistently high inflation. Russia’s invasion of Ukraine caused the prices of oil, wheat and other commodities produced in the region to soar. This in turn has led to sharp day-to-day and hour-to-hour reversals in the markets as expectations of worsening inflation rise and fall.

On Monday, negotiators from Russia and Ukraine met via video conference for a new round of talks, after both sides expressed some optimism in recent days. The talks ended without a breakthrough after several hours. The negotiators took “a technical break”, said Ukrainian presidential aide Mykhailo Podolyak, and planned to meet again on Tuesday.

Investors were already worried before the start of the war because central banks around the world are preparing to end the stimulus measures they injected into the global economy after the outbreak of the pandemic. The Federal Reserve’s Policy Committee is meeting this week, for example.

Most people expect it to raise its main short-term interest rate by a quarter of a percentage point on Wednesday. It would be the first increase since 2018, and it would take the federal funds rate down from its all-time high of near zero.

“Finally, the Fed is moving,” economists at BofA Global Research wrote in a report. In addition to raising short-term rates, the Fed could also give more details on how it will unleash the massive bond-buying program it conducted during the pandemic to keep rates in the long run. low term, the economists wrote. The central bank bought trillions of dollars of bonds to flood the economy with cash.

The Fed’s actions this week will likely be the first in a long march to raise interest rates and slow the economy enough to stamp out the highest inflation to hit the United States in 40 years. .

The 10-year Treasury yield jumped to 2.10% from 2.00% on Friday night after hitting its highest level since July 2019. The two-year yield, which moves more on expectations of policy changes of the Fed, went from 1.75% to 1.82%. .

However, the Fed faces a double danger. If he raised rates too quickly or too high, it would cause a recession. If too passive, high inflation could become more permanent.

The war in Ukraine makes the balancing act even more difficult. He’s pushing inflation higher by raising the prices of everything from nickel to natural gas. And it threatens to stunt economic growth. That’s why the S&P 500 just suffered its fourth weekly loss in the past five, while crude oil prices are up about a third for 2022 so far.

Oil prices returned much of those gains on Monday, however, as coronavirus concerns returned to the fore. A barrel of US oil slid 8.3% to $100.21. Brent, the international standard, fell 6.7% to $105.09.

The spread of virus outbreaks in China could affect energy demand and heighten concerns about supply chain disruptions from both the pandemic and war.

A vital manufacturing and technology center of 17.5 million people, Shenzhen is home to some of China’s most important companies, including telecommunications equipment maker Huawei Technologies Ltd., electric car brand BYD Auto, Ping An Insurance Co. and Tencent Holding, operator of the popular messaging service WeChat.

Foxconn, supplier to Apple and other electronics brands, said it suspended factory lines in Shenzhen due to the shutdown. In a notice to the Taiwan Stock Exchange, its listed company Hon Hai Precision Industry, the world’s largest contract manufacturing company, said it did not expect the suspension to have a major impact on its business. .

The Hang Seng index in Hong Kong fell 5% as the stock market’s technology index fell 11%. Shanghai shares lost 2.6%.


AP Business Writer Elaine Kurtenbach contributed.

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