US stocks fell on Wednesday as oil prices climbed above $100 a barrel, raising concerns about inflation and the Federal Reserve’s interest-rate path.
The Dow Jones Industrial Average fell 288 points while the S&P 500 declined 0.25%. The Nasdaq Composite shed 0.42%.
Oil prices fuel inflation concerns
Brent crude rose more than 2% to break above the $100-a-barrel mark for the first time since July, as escalating tensions between the US and Iran increased concerns about disruptions to Middle East energy supplies.
West Texas Intermediate crude futures also remained above $91 a barrel. The latest move extended oil’s gains from the previous session, when rising energy prices contributed to losses across the major US stock indexes.
The Dow Jones Industrial Average fell 1.2% on Tuesday, its worst session in almost three weeks. The S&P 500 and Nasdaq Composite declined 0.6% and 0.3%, respectively.
Higher oil prices have also pushed Treasury yields higher as investors assess the potential inflationary impact of more expensive energy. The 10-year Treasury yield briefly moved above 4.8% on Tuesday.
Fed rate outlook comes into focus
Investors are also assessing the Federal Reserve’s next policy decision as higher energy prices could complicate the inflation outlook.
Markets now see a 62.4% probability of a 25-basis-point rate increase at the Fed’s meeting next week, according to CME FedWatch data. The expectation has increased as policymakers continue to focus on inflation.
Upcoming economic data is expected to play a key role in determining the central bank’s next move.
Producer Price Index data is due Thursday, followed by the Consumer Price Index report on Friday.
The CPI reading will be particularly important because it is the final major inflation report available to policymakers before the September meeting.
Investors are also watching a planned US Treasury announcement on bond buybacks. The Treasury has said it would purchase more longer-dated bonds to help address rising yields.
Any reaction in the bond market could influence equities because higher government bond yields can weigh on stocks.
Tech stocks and individual movers
Technology and semiconductor stocks were under pressure. Intel declined 0.95%, and Nvidia slipped 0.28%. Apple stock fell 0.11% before it unveils the folded iPhone.
Investors remain focused on artificial intelligence stocks, although concerns have emerged around companies involved in financing transactions with one another.
These arrangements have raised questions about the sustainability of revenue growth across parts of the AI industry.
Elsewhere, Dow Inc. rose in trading after a report said the chemicals company was considering exiting its $20 billion partnership with Saudi Aramco.
Meta shares gained 4.7% after the company launched an AI assistant capable of performing tasks including sending emails, selling a car and booking travel.
The broader weakness extended beyond the US. Europe’s Stoxx 600 was down 0.69%, while major indexes in the UK, Germany, France and Italy also traded lower.
In Asia, Japan’s Nikkei 225 declined 0.19%, while South Korea’s Kospi rose 1.4% and China’s CSI 300 gained 0.3%.