Wall Street is adrift Monday as oil prices continue to rise to ratchet up pressure on inflation.
The Standard & Poor’s 500 index was down 0.1% at the start of the session, after experiencing its second consecutive week of decline. The Dow Jones industrial average was up 22 points, or 0.1%, at 34,640, as of 9:45 a.m. Eastern time, and the Nasdaq Composite Index was down 0.1%.
Stocks have been oscillating since early August amid uncertainty over whether the Federal Reserve will finally be done with its drastic interest rate hikes. Rising interest rates have helped cool inflation from its peak last summer, but they have also hurt stock prices and other investments while slowing the economy.
Traders almost universally expect the Fed to keep rates steady at its meeting this week, which ends Wednesday. More attention will be paid to forecasts that Fed officials will issue about where they see interest rates, the economy and the job market heading in the coming years.
One of the first questions the market will focus on will be how senior Fed officials view a hike in its main interest rate this year. Traders are betting on a roughly 40% chance that the Fed will raise rates again in November or December, according to CME Group data.
But just as much attention will be paid to what Fed officials say about next year, when investors expect the Fed to begin cutting interest rates. Investors seek such reductions, which generally ease financial conditions and boost financial markets. The big question is how much the Fed could cut rates.
Economists at Goldman Sachs expect Fed officials to indicate one percentage point cuts next year, after raising rates once again this year in a range of 5.50% to 5.75%.
Fears are high that rates will need to stay high for longer to bring inflation back up to the Fed’s 2% target. While underlying inflation trends continue to improve overall, the recent rise in oil prices has complicated matters.
A barrel of American crude rose another 0.9% on Monday to $90.79. This is up from less than $70 in July. Brent crude, the international standard, added 0.7% to $94.62 a barrel.
Rising prices for gasoline and other fuels are a key reason consumer inflation felt accelerated last month, rising from 3.2% to 3.7%.
Rising fuel prices, along with concerns that rates will stay high for longer, have helped push up Treasury yields in the bond market.
The 10-year Treasury yield remained at 4.33%, where it stood Friday evening. But it has especially been increasing since it was around 3.40% in May.
The two-year Treasury yield, which more closely tracks Fed expectations, remains at 5.04%.
Concerns about a possible recession also persist, although they have diminished with successive reports showing that the economy and job market continue to hum.
One worrying factor is the state of bond yields, with two-year and short-term yields continuing to remain higher than long-term yields. This is an unusual phenomenon that has often preceded recessions in the past.
Another warning sign comes from the Index of Leading Economic Indicators, which looks at manufacturers’ new orders, consumers’ expectations about economic conditions and other factors that could indicate where the economy is headed.
When its six-month annualized rate of change contracts to 3% or more, it is always associated with a recession, according to Doug Ramsey, chief investment officer of the Leuthold Group.
It has been 15 months since the most recent recession warning was triggered in June 2022. In the past, the longest period between such a trigger and a recession was the 16 months before the Great Recession. If it matches that one, it could imply a recession starting in October, Ramsey says.
On Wall Street, Clorox fell 0.9% after saying a cybersecurity attack caused widespread disruption to its business. The agency is still measuring the damage, but said it expects it to be significant for future results. Clorox also said it believed the unauthorized activity had been contained.
Steel Dynamics fell 1% after warning that its profits for the summer would decline from the spring, in part because of lower prices for some of its products.
Ford and General Motors fell as a limited strike by the United Auto Workers was postponed for another day. Ford fell 2.1% and General Motors fell 1.2%.
In overseas stock markets, Hong Kong’s Hang Seng index fell 1.4% following reports over the weekend that police had arrested staff at the property developer’s wealth management business in difficulty China Evergrande.
Indexes fell across much of the rest of Asia, as well as Europe.
P.A. wwriters Matt Ott and Elaine Kurtenbach contributed to this report.
Wall Street is adrift Monday as oil prices continue to rise to ratchet up pressure on inflation.
The Standard & Poor’s 500 index was down 0.1% at the start of the session, after experiencing its second consecutive week of decline. The Dow Jones industrial average was up 22 points, or 0.1%, at 34,640, as of 9:45 a.m. Eastern time, and the Nasdaq Composite Index was down 0.1%.
Stocks have been oscillating since early August amid uncertainty over whether the Federal Reserve will finally be done with its drastic interest rate hikes. Rising interest rates have helped cool inflation from its peak last summer, but they have also hurt stock prices and other investments while slowing the economy.
Traders almost universally expect the Fed to keep rates steady at its meeting this week, which ends Wednesday. More attention will be paid to forecasts that Fed officials will issue about where they see interest rates, the economy and the job market heading in the coming years.
One of the first questions the market will focus on will be how senior Fed officials view a hike in its main interest rate this year. Traders are betting on a roughly 40% chance that the Fed will raise rates again in November or December, according to CME Group data.
But just as much attention will be paid to what Fed officials say about next year, when investors expect the Fed to begin cutting interest rates. Investors seek such reductions, which generally ease financial conditions and boost financial markets. The big question is how much the Fed could cut rates.
Economists at Goldman Sachs expect Fed officials to indicate one percentage point cuts next year, after raising rates once again this year in a range of 5.50% to 5.75%.
Fears are high that rates will need to stay high for longer to bring inflation back up to the Fed’s 2% target. While underlying inflation trends continue to improve overall, the recent rise in oil prices has complicated matters.
A barrel of American crude rose another 0.9% on Monday to $90.79. This is up from less than $70 in July. Brent crude, the international standard, added 0.7% to $94.62 a barrel.
Rising prices for gasoline and other fuels are a key reason consumer inflation felt accelerated last month, rising from 3.2% to 3.7%.
Rising fuel prices, along with concerns that rates will stay high for longer, have helped push up Treasury yields in the bond market.
The 10-year Treasury yield remained at 4.33%, where it stood Friday evening. But it has especially been increasing since it was around 3.40% in May.
The two-year Treasury yield, which more closely tracks Fed expectations, remains at 5.04%.
Concerns about a possible recession also persist, although they have diminished with successive reports showing that the economy and job market continue to hum.
One worrying factor is the state of bond yields, with two-year and short-term yields continuing to remain higher than long-term yields. This is an unusual phenomenon that has often preceded recessions in the past.
Another warning sign comes from the Index of Leading Economic Indicators, which looks at manufacturers’ new orders, consumers’ expectations about economic conditions and other factors that could indicate where the economy is headed.
When its six-month annualized rate of change contracts to 3% or more, it is always associated with a recession, according to Doug Ramsey, chief investment officer of the Leuthold Group.
It has been 15 months since the most recent recession warning was triggered in June 2022. In the past, the longest period between such a trigger and a recession was the 16 months before the Great Recession. If it matches that one, it could imply a recession starting in October, Ramsey says.
On Wall Street, Clorox fell 0.9% after saying a cybersecurity attack caused widespread disruption to its business. The agency is still measuring the damage, but said it expects it to be significant for future results. Clorox also said it believed the unauthorized activity had been contained.
Steel Dynamics fell 1% after warning that its profits for the summer would decline from the spring, in part because of lower prices for some of its products.
Ford and General Motors fell as a limited strike by the United Auto Workers was postponed for another day. Ford fell 2.1% and General Motors fell 1.2%.
In overseas stock markets, Hong Kong’s Hang Seng index fell 1.4% following reports over the weekend that police had arrested staff at the property developer’s wealth management business in difficulty China Evergrande.
Indexes fell across much of the rest of Asia, as well as Europe.
P.A. wwriters Matt Ott and Elaine Kurtenbach contributed to this report.
