U.S. stocks declined and oil prices reversed earlier gains, as talks between Russia and Ukraine yielded little progress and inflation readings reached a 40-year high.
The Nasdaq Composite Index fell about 1.0% in 4 p.m. trading on Thursday, while the S&P 500 declined about 0.4%. The Dow Jones Industrial Average was 0.3%, or about 112 points, lower. All three indexes closed higher than their session lows but finished down for the third time this week after breaking a four-session losing streak Wednesday. Oil prices closed down after rising in earlier trading.
Investors are worried about the global economic outlook, sapping their appetites for riskier assets in recent days. The S&P 500 and Dow industrials remain in correction territory, while the Nasdaq is in a bear market.
The yield on the benchmark 10-year Treasury, meanwhile, increased to 2.008% from 1.946% Wednesday for its fourth consecutive gain.
“Investors are yo-yoing between hope and fear linked to a potential cease-fire or some kind of positive outcome” in Ukraine, said
Mike Mussio,
president of FBB Capital Partners. A Thursday meeting between Russian and Ukrainian officials in Turkey didn’t yield a cease-fire agreement, according to Ukraine’s foreign minister.
U.S. inflation reached a new four-decade high in February, with the consumer-price index up 7.9% from a year earlier. Gas prices are at record levels, hurting consumers’ budgets. Analysts are warning that the U.S. and Europe could see sustained inflation and lower economic growth—also known as stagflation—with elevated energy prices eating away at household spending on other items.
Federal Reserve Chairman
Jerome Powell
said last week that he plans to propose a quarter percentage-point rate increase at the central bank’s meeting next week in an effort to control inflation.
“The Fed faces an enormously difficult challenge, and it’s going to have to really walk a tightrope between inflation and pushing us into recession,” said
Ed Keon,
chief investment strategist at PGIM Quantitative Solutions.
On Thursday, futures for Brent crude, the global oil benchmark, erased earlier gains, trading down 1.6% at $109.33 a barrel. The U.S. equivalent, West Texas Intermediate, also gave up earlier gains, trading down 2.5% at $106.02. Oil prices declined from recent highs on Wednesday but remained above $100 a barrel.
“Oil prices have been like a rocket ship,” said
Jason Pride,
chief investment officer of private wealth at Glenmede. “There’s a high likelihood that with the magnitude of the move, there could be some backing off in that trade.”
The S&P’s energy sector rose more than 3% despite declines in oil prices. Most sectors, however, fell…
Read More: Stock Markets Close Lower as Inflation Rises, War in Ukraine