Stock Market Today: Dow Falls, Gold and Oil Surge, Bed Bath & Beyond Soars

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Stocks plunged Monday and investors sought havens as oil prices hit the highest level since 2008, driven higher by supply fears amid a possible ban from the U.S. and allies on Russian crude.

Futures for the

Dow Jones Industrial Average
fell 430 points, or 1.3%. The index ended 179 points lower on Friday to close at 33,614.

S&P 500
futures signaled a start 1.3% into the red with the

Nasdaq
poised to drop 1.4%.

Declines were more severe overseas, where Frankfurt’s

DAX
shed 2.8%—putting Germany’s blue-chip index into a bear market, down more than 20% this year. Tokyo’s

Nikkei 225
ended the day 2.9% lower.

The selloff in stocks came as Russia’s invasion of Ukraine continued to weigh on investors—in particular, the impact on oil prices. 

Crude spiked to start the new trading week, surging to the highest level in more than a decade, after Secretary of State Antony Blinken said over the weekend that the U.S. and European allies were considering an outright ban on Russian crude. That would exacerbate supply pressures for a global oil market that is already incredibly tight.

“Equity markets are set to open sharply lower as a result,” said Jim Reid, a strategist at

Deutsche Bank
.
“The news out of the U.S. over the weekend shows the momentum is building for fiercer sanctions on Russia.”

Futures for U.S. benchmark West Texas Intermediate crude rose 6.5% to above $123 a barrel on Monday, having neared $127 when prices jumped as trading opened on Sunday. Similar action was seen for international oil benchmark Brent, which surged 6% to $125. It crossed $130 a barrel in early trading.

Compounding the news from Blinken was an update on the Iran nuclear talks, which could see Iranian crude ease the incredibly tight supply situation. “Russia made last-minute demands of the U.S. over the Iran nuclear deal, jeopardizing it and the return of Iranian oil to official markets,” said Jeffrey Halley, an analyst at broker Oanda.

While tough financial sanctions have so far led to supply-chain complications and traders “self-sanctioning” Russian oil, pushing prices skyward, an outright embargo could see the situation get more extreme.

“Panic has been seen again in oil markets,” said Halley. “I am unsure where …crude goes from here. All I know is that high prices are here to stay.”

Oil is at its highest levels since 2008, when WTI topped out around $140, with the past week seeing the fastest rise in prices in more than a decade.

Prices were rising long before Russian troops crossed into Ukraine on Feb. 24. A year ago a barrel of crude was $61, which rose to $76 by the time 2021 was done. Demand for oil has come roaring back from the depths of the COVID-19 pandemic amid a backdrop of tight supply, with producers such as the OPEC+ group of oil-exporting countries facing barriers to increasing their output.

Commodity markets have since been roiled by the Russian invasion of Ukraine. By late February, before Russia launched its full-scale attack, WTI futures were around $92, and have spiked more than 30% since then.

Persistently high prices could cause consumer prices to spike, stoking inflation concerns, and complicating the job of central banks such as the Federal Reserve as they prepare to fight inflation by tightening monetary policy this year.

While markets have recently been pricing in a less aggressive stance from the Fed due to the Russia-Ukraine situation, traders still expect multiple interest-rate increases this year, with the first 25 basis-point increase coming this month.

Gold prices marched higher, as investors fled to havens amid declines in stocks as well as cryptocurrencies. Futures for the precious metal jumped near 2%, topping $2,000 an ounce, the highest levels since mid-2020. Closing above $2,000 would mark just the second period that gold has breached that mark in at least 50 years.

Here are two stocks on the move Monday:

Occidental Petroleum

(ticker: OXY) rose 9.3% in U.S. premarket trading. Three key factors were in play: high crude prices; a significant stake disclosed by

Warren Buffett’s Berkshire Hathaway

(BRK.A. and BRK.B); and reports that activist investor Carl Icahn sold the last of what was once a roughly 10% stake in the oil company.

Bed Bath & Beyond

(BBBY) shot up 70% in the premarket following news that

GameStop

(GME) chairman Ryan Cohen took a major stake in the retailer and had urged it to explore strategic alternatives, including a sale.

Write to Jack Denton at [email protected]