Topline
Stocks fell once again on Thursday following another dismal inflation report—with consumer prices jumping 7.9% in February, while investors hoping for a resolution to the Russia-Ukraine conflict were disappointed by the latest round of negotiations, which failed to make progress on establishing a ceasefire.
Oil prices surged and stocks fell amid rising inflation and uncertainty over the war in Ukraine.
Key Facts
Stocks took a hit after February’s red-hot inflation report: The Dow Jones Industrial Average fell 0.5%, nearly 200 points, while the S&P 500 lost 0.8% and the tech-heavy Nasdaq Composite 1.3%.
Consumer prices rose 7.9% in the 12 months ending in February, according to data from the Labor Department, climbing at the fastest clip in four decades as oil and gas prices have surged due to Russia’s invasion of Ukraine.
The ongoing conflict has weighed heavily on markets and continued to do so on Thursday, as negotiations between Russian and Ukrainian officials made little progress on issues such as establishing a cease-fire or humanitarian corridors for evacuation of civilians.
Oil prices, which have skyrocketed in recent weeks amid the ongoing conflict, rebounded on Thursday after falling over 10% a day earlier: U.S. benchmark West Texas Intermediate now sits at $114 per barrel, while global benchmark Brent crude is trading at around $117 per barrel.
The impact of higher oil prices will be felt by Americans at the gas pump, economists have warned, with U.S. gas prices already at record levels, hitting a new all-time high of more than $4.31 per gallon on Thursday, according to AAA data.
Shares of e-commerce giant Amazon, meanwhile, jumped nearly 4% a day after announcing a 20-1 stock split and $10 billion buyback—following in the footsteps of Google-parent Alphabet and other mega-cap tech companies which have recently split their stocks.
Crucial Quote:
“The inflation situation is getting worse, not better,” says John Leer, chief economist for Morning Consult. “While gas prices explain much of the story, food and housing prices were also key drivers in February.”
What To Watch For:
Whether the ongoing Russia-Ukraine conflict will cause energy prices to continue surging higher. Economists recently warned that with oil potentially spiking above $150 per barrel, that would only exacerbate rising consumer prices and potentially slow economic growth. With no end in sight to rising inflation, investors will now be looking ahead to the Federal Reserve’s upcoming monetary policy meeting next week, with the central bank widely expected to raise interest rates by 0.25%.
Further Reading:
Dow Jumps 700 Points As Oil Prices Fall—But Worries Are Far From Over (Forbes)
These Energy Stocks Are Surging As Oil And Gas Prices Keep Climbing With No Relief In Sight (Forbes)
Stocks Fall After Historic U.S. Ban On Russian Energy, Oil Nears $130 Per Barrel (Forbes)
Here’s How Biden’s Historic Ban On Russian Oil Will Hit The Economy (Forbes)
Source: https://www.forbes.com/sites/sergeiklebnikov/2022/03/10/dow-falls-400-points-after-red-hot-inflation-report-and-failed-russia-ukraine-talks/