Wall Street will return to rally mode and bark as oil rises again | Business News

New York (AP) — Wall Street soared again on Wednesday as oil prices continued to rise, but stock and Treasury yields rose. This time I returned to rally mode.

The S & P 500 rose 2.1% in the afternoon trading after Federal Reserve Chair Jerome. Powell said he supports a more gradual rise in interest rates This month than some investors were afraid of. He also said he expects inflation, which is at its highest level in 40 years, to ease throughout the year.

The comments helped accelerate the rise in stock prices from early morning. In other areas of the market, there is less concern from the previous day. Russia invades Ukraine The S & P 500 plummeted 1.5% and prices for all types of commodities soared.

Treasury yields soared to recover some of the sharp losses from last week. Gold has receded and tensions among Wall Street equity investors have eased after recent sharp fluctuations.

Jeff Kleintop, Chief Global Investment Strategist at Charles Schwab, said: “Geopolitical conflicts can be very disturbing, but there is no tendency to get bear markets from them, only during periods of volatility.”

The market is spinning violently as investors try to measure how much Russia’s attack on Ukraine will push up the prices of oil, wheat and other commodities, which are major producers in the region. On top of that, there are concerns about how future increases in interest rates by the Federal Reserve and other central banks around the world will affect the economy and inflation.

Chair Jerome Powell said at a meeting later this month that the Fed would support a traditional quarterly increase in benchmark short-term interest rates rather than the significant increase proposed by some policy makers. But, as the Fed predicts, if inflation hits a 40-year high this year but doesn’t fall noticeably, Powell has opened the door to a bigger hike. The higher the Federal Reserve interest rate, the higher the interest rate on consumers and businesses, such as homes, car loans and credit cards.

The Federal Reserve said in parliamentary testimony that his central bank plans to raise key interest rates for the first time since 2018, because the attack on Ukraine has very uncertain impact on the U.S. economy. He also said that the situation may have worsened. , “He added,” I have never done an autopilot. “

The Fed needs to balance tightrope walking and raise interest rates enough to curb the highest inflation for generations, but not enough to drive the economy into recession. In the meantime, higher interest rates tend to put downward pressure on equities and most other investments.

Yields on 10-year Treasuries jumped from 1.72% to 1.86% late Tuesday, while 2-year Treasuries soared from 1.31% to 1.50%. However, yields are well below pre-invasion levels in Russia. Yields for the last decade were above 2%, but plummeted as investors invested in what they considered safer in the face of war concerns.

US oil prices rose 6.2% to $ 109.80 a barrel, although they eased after rising to $ 112.51 in the morning for the first time since 2014. Brent crude, the international standard, rose 6.3% to $ 111.54 a barrel.

OPEC and its oil ally leaders plan to gradually increase oil production while Russia’s invasion of Ukraine shakes markets, reforms the alliance, kills civilians and sends soaring oil prices. I’m sticking. The OPEC + coalition of oil producers has chosen to increase oil production by 400,000 barrels per day in April. Since July, a coalition of Saudi-led OPEC members and Russia-led non-cartel members has been working on that amount each month to gradually recover the significant reductions in production that took place early in the coronavirus pandemic. Adding oil.

Leaders of OPEC and other major oil producing countries On Wednesday, they decided to stick to their plan to gradually increase oil production. The OPEC + coalition of oil producers, consisting of Saudi-led OPEC members and Russia-led non-cartel members, chose to increase oil production by 400,000 barrels per day in April.

This move follows perhaps a less influential decision by the US and other major governments of the International Energy Agency to free 60 million barrels from strategic stockpiles to increase supply.

“The market has rejected the idea that the strategic stockpile of 60 million barrels released poses a risk of jeopardizing Russia’s supply,” said Tan Boon Heng of Mizuho Bank. “Russia is doing more than that in just six days.”

In the stock market, all uncertainties about oil prices and inflation are causing large fluctuations not only daily but also hourly. Until Wednesday afternoon, the S & P 500 fluctuated between 0.4% and 2.2%.

As of 2:00 pm Eastern Standard Time, the Dow Jones Industrial Average was 33,985, 687 points, or 2.1% higher. The Nasdaq Composite Index was 1.7% higher.

More than 90% of S & P 500 shares rose, with technology, financial and healthcare companies accounting for the majority of the rise. Energy stocks played a leading role as S & P 500 energy stocks rose 2.8%, embarking on rising energy prices. Bank stocks also made big profits, as higher long-term interest rates could mean greater profits for those lending.

Ross Stores rose 6.6% after reporting stronger profits in the previous quarter than analysts expected.

Jim Farley, Ford Motor’s CEO, will lead the electrical division.

Ford After accelerating the conversion to an electric vehicle company and announcing that it had split its EV and internal combustion engine businesses into two separate businesses, it surged 8.1%.

Stock markets around the world were mixed. France’s CAC 40 rose 1.6%, Germany’s DAX returned 0.7%, and Japan’s Nikkei 225 fell 1.7%.

The Russian central bank said stock trading on the Moscow Stock Exchange remained closed on Wednesday for the third day, but currency and precious metal trading will resume for the first time this week.

Late Tuesday, President Joe Biden announced that he would join the U.S. ally. Close the country’s airspace to Russian aircraft,latest Set of sanctions And other measures intended to isolate Russia.

But Biden also said in his annual State of the Union address that he would try to relieve Americans from the effects of rising oil prices.

“I use all the tools we have at our disposal to protect American businesses and consumers,” Biden said.

Contributed by AP business writers Joe McDonald and Damian J. Troise. Veiga reported from Los Angeles.

Copyright 2022 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.

Wall Street will return to rally mode and bark as oil rises again | Business News

Source link Wall Street will return to rally mode and bark as oil rises again | Business News

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