Stocks jump the most since June 2020 as oil prices fall sharply – Press Enterprise

By STAN CHOE, DAMIAN J. TROIS and ALEX VEIGA

NEW YORK (AP) — Stocks took their biggest jump since June 2020 on Wednesday, as a sharp drop in oil prices eased fears that inflation is about to worsen around the world. The S&P 500 rose 2.6%. The rally ended a four-day losing streak for stocks, but was not enough to erase their losses for the week. The price of U.S. crude oil fell 12%, the most since November, bringing relief after a sharp rise in crude prices since Russia invaded Ukraine. Big swings have rocked the markets in recent weeks as investors try to guess what damage the war will do to the global economy.

THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.

NEW YORK (AP) — Stocks rallied and oil prices fell sharply on Wednesday as the big swings rocking global markets go both ways amid uncertainty over the war in Ukraine.

The S&P 500 was up 2.9% in afternoon trading after a four-day losing streak that pulled it 13% below its record high set earlier this year.

The Dow Jones Industrial Average was up 753 points, or 2.3%, at 33,387 as of 3:16 p.m. EST, and the Nasdaq composite was up 3.8%.

These big swings have rattled markets in recent weeks as investors grope to guess the economic damage Russia’s invasion of Ukraine will cause. The swings hit not just day-to-day, but also hour-to-hour, with some days seeing multiple large reversals.

The chaotic movements are only expected to continue with such high uncertainty about the war in Ukraine and its ultimate economic fallout. The region is key to markets as it is a major producer of oil, wheat and other commodities, the prices of which have soared on concerns about supply disruptions.

Stocks again moved in the opposite direction of oil prices, with inflation a major concern. Analysts said bargain hunters could claw back stocks after worries about a slowing economy coupled with high inflation triggered their recent sharp decline. Many of these buyers appear to be smaller-pocketed “retail” investors trading on their phones and laptops. And they often buy stocks that big professional investors sell.

Crude oil prices fell and the fall accelerated amid reports that the United Arab Emirates will urge other OPEC members to increase production and ease supply problems. A barrel of US crude oil fell 12.1% to settle at $108.70. Brent, the international standard, fell 13.2% to settle at $111.14.

Last week saw record selling of US stocks by hedge funds, wrote strategist Jill Carey Hall in a recent report by BofA Global Research. Retail investors and institutional investors were net buyers.

The movements of retail investors may be the result of people worrying about missing out on any potential rebound. A buy-the-dip strategy, where stock declines were seen primarily as opportunities to buy low, was very successful after the 2020 crash caused by the coronavirus. The S&P 500 has continued to climb since that 10% flat drop until recently.

Recent big market moves also show that prices are already reflecting a lot of pessimism, with crude oil prices up more than 50% so far in 2022. Perhaps this is why crude prices have actually retreated on Tuesday, after President Joe Biden announced a US ban on Russian oil imports. A ban will lead to supply disruptions, but oil traders may have already taken that into account when they briefly pushed the price of U.S. crude above $130 a day ahead of the announcement.

Gold prices and some nervousness among stock investors on Wall Street also eased.

European equities rallied even more than the US market. The German DAX jumped 7.9% and the French CAC 40 7.1%.

European nations face an even greater shock than the United States from rising energy prices due to Russia’s invasion of Ukraine. This could lead the European Union to take greater measures to support its economy.

The result could be more stimulus and more caution from central banks on interest rate hikes, said Stephen Dover, chief market strategist and director of the Franklin Templeton Investment Institute.

“While the United States will have the wind in its face as the stimulus falls, Europe may actually have the wind in its sails.”

Asian markets have mostly fallen. Shares in Shanghai fell 1.1% after the Chinese government announced consumer price inflation accelerated in February.

On Wall Street, the gains were broad-based, with nearly 90% of S&P 500 stocks up, led by technology companies. Some of the strongest moves came from airlines, travel companies and other stocks which rebounded from steep declines on worries about fuel costs and the economy.

United Airlines was up 9.2%, though still down nearly around 19% for the year so far. Cruise line Carnival rose 9.6% and Booking Holdings rose 8.2%.

Among the few declines on Wednesday were oil-related companies, which lost momentum after big jumps this year due to rising crude prices. Halliburton fell 5.3%, although it is still up around 52% for 2022.

These swings have been particularly significant in commodity markets, as Russia is the second-largest exporter of oil and the third-largest supplier of nickel, which is used in electric car batteries, stainless steel and other products. Russia and Ukraine are also among the world’s largest sellers of wheat.

Less than a week after removing Russia from its list of countries considered a safe place to invest, Fitch further downgraded its credit rating on the country and warned of an impending default on sovereign debt.

Treasury yields rose on the eve of an anticipated interest rate hike by the Federal Reserve. The Fed’s policymaking committee is meeting next week, and it’s widely expected to vote to raise its benchmark short-term rate by a quarter of a percentage point. It would be the first such increase since 2018.

The Fed faces a delicate and increasingly difficult task as it prepares to raise rates through 2022, which tends to slow the economy. The central bank wants to drive rates high enough to bring down inflation, which is at its highest level in generations. But he does not want to increase them to the point of causing a recession.

“There’s more uncertainty about what the Fed is going to do now than there was a few weeks ago,” Dover said.

The 10-year Treasury yield rose to 1.94% from 1.86% on Tuesday evening.

Bitcoin’s value rose more than 9% and climbed back above $42,000 after Biden signed an executive order on government oversight of the cryptocurrency. Crypto players say they are increasingly in favor of more regulation and want to participate in its development.

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AP Business Writer Joe McDonald contributed. Veiga reported from Los Angeles.

Steve R. Hansen