Trade was choppy for much of the session as investors were caught in a tug-of-war over oil supply concerns.
Iran continued to attack ships in the blockaded Strait of Hormuz, but Opec assured markets that Saudi Arabia had ramped up production and the International Energy Agency (IEA) agreed to release 400 million barrels of oil from its strategic reserves.
The Dow logged the steepest percentage drop among the three major US equity indexes, while chip manufacturers lifted the tech-heavy Nasdaq to a marginal, late-session gain.
The US Labour Department’s Consumer Price Index (CPI) indicated that inflation remained moderate last month, matching analyst expectations. Annual CPI growth is now within half a percentage point of the US Federal Reserve’s 2 percent target.
Still, markets shrugged off the report, as it predated the war on Iran, which has sent crude prices soaring and could stoke inflation.
Inflation jitters mounted after Iran’s military command said the world should prepare for crude prices to hit US$200 per barrel, more than double their current level.
“In such an uncertain environment, the markets and investors are kind of starving for any signal, in one direction or another,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
“There have been these false or inaccurate reports, and the markets are swinging on that type of news.”
“It’s all about the consumer, and how the shock of a sustained increase in oil prices is going to affect the consumer’s pocketbook and their spending habits,” Keator added.
The Fed is widely expected to let its key interest rate stand at its upcoming policy meeting, during which policymakers are likely to weigh the possibility of spiking prices against signs of a softening jobs market, a combination that raises concerns over potential stagflation.
The Dow Jones Industrial Average fell 289 points, or 0.6 percent, to 47,417, the S&P 500 lost 5 points, or 0.1 percent, to 6,775 and the Nasdaq Composite gained 19 points, or 0.1 percent, to 22,716.
Among the 11 major sectors of the S&P 500, consumer staples notched the largest percentage decline, while energy was the clear outperformer, rising 2.5 percent on rising crude prices.
Front-month WTI and Brent crude futures settled up 4.6 percent and 4.8 percent, respectively.
Tech was also marginally higher, with a boost from Oracle, which provided better-than-anticipated revenue guidance on expectations that the artificial intelligence-related spending boom will extend through 2027. Its shares jumped 9.2 percent. (Reuters)
Edited by Cecil Wong
