Big Wall Street rally slows as oil climbs back above $100

NEW YORK (AP) — Wall Street’s big two-day rally stalled on Thursday as oil prices rallied above $100 to keep pressure on inflation.

The S&P 500 was up 0.4% in afternoon trading, having jumped more than 2% on each of the previous two days for its best consecutive performance in nearly two years.

The Dow Jones Industrial Average rose 136 points, or 0.4%, to 34,200 at 12:23 p.m. EST, and the Nasdaq composite rose 0.3%. All three indices swung between small gains and losses after better than expected reports on the US economy in the morning.

These are the latest swings in markets as investors struggle to handicap what will happen to the economy and global inflation already high due to Russia’s invasion of Ukraine, higher interest rates highs from central banks around the world and renewed concerns about COVID-19 in various hotspots. .

A barrel of U.S. crude jumped 8.3% to $102.93, while Brent, the international standard, jumped 9% to $106.87 a barrel. These movements have become the norm recently, as prices have crashed due to uncertainties regarding both oil supply and demand. After briefly rising above $130 at the start of last week, a barrel of US crude fell almost to $94 on Wednesday.

Snatches of news about the state of negotiations between Russia and Ukraine have caused many sharp reversals. Similarly, there have been recent concerns about economic shutdowns in China due to the surge in COVID-19 infections, which could affect energy demand.

On Thursday, the Chinese government said businesses in Shenzhen, a major business hub, will be allowed to reopen as efforts to contain coronavirus outbreaks progress. Their earlier shutdowns had rattled financial markets. This followed a promise made on Wednesday to “invigorate the economy” with market-friendly policies.

The Hang Seng stock index in Hong Kong, neighboring Shenzhen, jumped 7% to continue its frantic run. Earlier this week, it went from a 5% decline to a 5.7% plunge to a 9.1% rise.

All of the frantic moves come amid uncertainty about whether the economy is headed for a painful combination of stagnant growth and persistently high inflation.

Behind it all, the Federal Reserve and other central banks are trying to slow the economy enough to quell high inflation, but not so much as to cause a recession. The Bank of England was one of the most aggressive and on Thursday raised its key rate for the third time since December. A day earlier, the Fed raised its key rate for the first time since 2018.

It’s a delicate dance, and the surge in US stock prices on Wednesday seems to indicate that some investors see it succeeding.

“Far from stifling growth, the start of the Fed’s tightening cycle appears to have been warmly welcomed,” ING’s Chris Turner and Francesco Pesole said in a report. “Investors applaud measures to deal with high inflation.”

A flurry of better-than-expected reports on the US economy on Thursday may also have helped. Fewer workers filed for unemployment last week and builders broke more homes last month than economists expected. A third report, meanwhile, showed manufacturing in the mid-Atlantic region was stronger than expected. That potentially allayed some of the concerns of an earlier report that showed the weakest activity in New York state since the pandemic began.

A fourth report said industrial production slowed last month, but still rose as much as economists had expected.

Energy stocks jumped to some of the biggest gains in the U.S. stock market on the back of the resurgence in oil prices, helping to keep the S&P 500 as stable as it was.

Occidental Petroleum jumped 8.4% after Berkshire Hathaway, the company run by famed investor Warren Buffett, increased its stake in the company. Cheniere Energy rose 2.9% after the US Department of Energy gave it permission to sell more liquefied natural gas to all all-European countries as they seek to move away from Russian energy products .

However, higher fuel costs hit travel agencies, and airlines were among the heaviest hitters in the market. Delta Air Lines lost 1.9%. Cruise line Carnival fell 3.4%.

Treasury yields were mixed. The 10-year Treasury yield fell to 2.16% from 2.19% on Wednesday night.


AP Business Writers Joe McDonald and Damian J. Troise contributed.

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