Wall Street Stocks Down As Oil, Inflation Fears Surge

Stocks slipped on Wall Street Thursday as global markets remain choppy amid uncertainty about where inflation, interest rates and the global economy are heading, Stan Choe reported for the Associated Press (AP) early on Mar. 11, 2022.

Photo Insert: Such swings have become common in recent weeks after Russia’s invasion of Ukraine raises worries about how high prices will go for oil, wheat, and other commodities produced in the region.

The S&P 500 slumped 1.2% in morning trading, on pace for its fifth drop in the last six days. It marks another reversal for US stocks, which just a day earlier surged to their biggest gain since June 2020 when a tumble for oil prices seemed to take pressure off the world’s already high inflation.

Oil prices had their own swings Thursday morning, with a barrel of US crude jumping as much as 5.7%, before flip-flopping between gains and losses. It was recently at $110.67, up 1.9%.

Recent surges in energy prices have raised the risk that the economy is set to struggle under a toxic cocktail of persistently high inflation and slowing growth.

The Dow Jones Industrial Average fell 309 points, or 0.9%, to 32,978, as of 10:35 a.m. Eastern time. The Nasdaq composite was 1.7% lower. European stocks were hit even harder, with Germany’s DAX losing 1.6% and France’s CAC 40 down 1.7%. Asian stocks earlier in the day mostly rose.

Such swings have become common in recent weeks after Russia’s invasion of Ukraine raises worries about how high prices will go for oil, wheat, and other commodities produced in the region.

Markets were already on edge before the war began because high inflation is pushing central banks to raise interest rates for the first time in years and halt programs launched to support the global economy after the pandemic struck.

The yield on the 10-year Treasury, which tracks expectations for inflation and economic growth, slumped immediately after the inflation report’s release but then wavered.

It was recently at 1.99%, up from 1.94% late Wednesday. The two-year Treasury yield, which moves more on expectations of what the Federal Reserve will do with short-term interest rates, was at 1.71%, up from 1.68%.

The wide expectation is that the Fed will raise its key short-term rate by a quarter of a percentage point next week, which would be the first since 2018. The recent surge in commodity prices has complicated its pathway to raising interest rates enough to stamp out high inflation without tipping the economy into a recession.

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