Stocks rally on Wall Street as oil prices keep falling
NEW YORK (AP) — Stocks are rallying on Wall Street Tuesday as oil prices slid sharply for a second day and inflation worries ebbed.
The S&P 500 was 1.3% higher in morning trading after a report showed inflation's rapid acceleration took a pause at the wholesale level last month. The Dow Jones Industrial Average was up 337 points, or 1%, at 33,282, as of 10:38 a.m. Eastern time, and the Nasdaq composite was 1.8% higher.
The wilder action was in oil and Asian stock markets, where tightened anti-COVID measures in China are raising worries about demand for energy and about disruptions to manufacturing and global trade. Oil prices tumbled more than 8%, taking some pressure off the world's high inflation, and a barrel of U.S. crude fell below $95 after starting the week above $109. Stocks in Hong Kong sank more than 5% for a second straight day after the neighboring city of Shenzhen was ordered into a shutdown.
Renewed Covid-19 worries come on top of a lengthy list of concerns for markets, which have caused wild hour-to-hour swings in recent weeks. The war in Ukraine catapulted prices for oil, wheat and other commodities the region produces. That's raising the threat that already high inflation will persist and combine with a potentially stagnating economy.
Central banks around the world, meanwhile, are preparing to pull the plug on the support they poured into the global economy after the pandemic struck. The Federal Reserve is beginning a two-day meeting on interest rates, and the wide expectation is that it will announce on Wednesday an increase of 0.25 percentage points to its key short-term rate.
That would be the first increase since 2018, pulling it off its record low of nearly zero, and likely the first in a series of rate hikes.