U.S. stocks tumble as oil prices near $100, reviving inflation concerns
Major U.S. indexes fell on Tuesday after Brent crude approached $100 a barrel, prompting worries about persistent inflation and the prospect of another Federal Reserve rate hike.
U.S. equity markets closed lower on Tuesday as rising oil prices rekindled inflation worries and heightened expectations of tighter monetary policy. The Dow Jones Industrial Average slipped 628 points, or 1.2%, to 52,786, while the S&P 500 fell 45 points, or 0.6%, to 7,674 and the Nasdaq lost 86 points, or 0.3%, to 26,421.
Brent crude edged toward the $100 per barrel mark amid escalating tensions in the Middle East, and the 10-year Treasury yield rose to about 4.8%, reflecting growing market anticipation of a possible quarter-point Federal Reserve rate increase at its upcoming meeting.
"Oil prices have continued to climb amid ongoing strikes in the Middle East, heightening concerns over potential supply disruptions," said Axel Rudolph, chief technical analyst at IG.
"Markets are pricing in around a 58% chance of a 25-basis-point Fed rate hike next week, while Tuesday’s three-year Treasury auction marks the start of a busy period of government debt issuance," Rudolph added.
Investors also focused on the impact of newly imposed Canadian retaliatory tariffs on U.S. goods, which added to the broader trade-policy backdrop. The Treasury market prepared for a $58 billion auction of three-year notes, and the New York Federal Reserve was set to release its latest consumer inflation expectations ahead of key producer-price and consumer-price data later in the week.
The day's earnings calendar includes reports from Chewy, Jersey Mike’s, Korn Ferry and Signet Jewelers, which may further influence market direction.