Wall St drops 1% on inflation angst as oil soars By Reuters
© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, New York, U.S., March 3, 2022. REUTERS/Brendan McDermid
By Devik Jain and Sabahatjahan Contractor
(Reuters) – U.S. stock indexes tumbled more than 1% on Monday as the prospect of a ban on oil imports from Russia sent crude prices soaring and fueled concerns about spiraling inflation.
Eight of the 11 major S&P sectors were lower, with financial and technology sliding 2%. The energy index surged 2.5% to its highest since May 2015.
Countries from Japan to the United States discussed banning Russian oil imports in response to the country’s invasion of Ukraine, helping scale $139 a barrel in the session, its highest since 2008. [O/R]
“When you’ve got the combination of impacts from the COVID pandemic, heightened inflation to Russia situation, it’s a fix for heightened volatility,” said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York.
“We’re very bullish on equities, but we’re cautioning investors to brace for a rough ride over the next few weeks.”
The CBOE volatility index, also known as Wall Street’s fear gauge, rose to 33.92 points after hitting an over one-week high earlier in the session.
Russia, which calls the campaign it launched on Feb. 24 a “special military operation”, has told Ukraine it is ready to halt military operations “in a moment” if Kyiv meets a list of conditions, the Kremlin spokesman said.
At 10:18 a.m. ET, the was down 358.68 points, or 1.07%, at 33,256.12 and the was down 50.95 points, or 1.18%, at 4,277.92.
The was down 196.27 points, or 1.47%, at 13,117.17.
Bank of America (NYSE:) fell 3.7%, dragging the S&P 500 banks index down 2.2%. Payment services providers Visa (NYSE:), American Express (NYSE:) Mastercard (NYSE:) lost nearly 4% after they suspended operations in Russia.
Cruise operator Royal Caribbean (NYSE:) Cruises Ltd and carrier United Airlines Holdings (NASDAQ:) Inc dropped 6.1% and 7.0%, respectively, to lead losses among travel companies, as the jump in oil prices threatens to again disrupt a nascent recovery.
Defense stocks L3Harris Technologies (NYSE:) Inc, Northrop Grumman Corp (NYSE:) and Lockheed Martin Corp (NYSE:) gained between 3.3% and 4.6%.
Investors are awaiting U.S. consumer prices report on Thursday, with a hotter reading likely to seal a Federal Reserve rate hike later this month.
Fed Chair Jerome Powell last week backed a 25-basis-point rate hike at the central bank’s March 15-16 policy meeting and would be “prepared to move more aggressively” later if inflation does not abate as fast as expected.
Traders now see a 99% probability of a 25 basis point rate hike by the Fed at its March meeting, while a 1% chance of no change in rates. [IRPR]
Declining issues outnumbered advancers for a 2.02-to-1 ratio on the NYSE and a 1.89-to-1 ratio on the Nasdaq.
The S&P index recorded 46 new 52-week highs and 35 new lows, while the Nasdaq recorded 48 new highs and 293 new lows.