The Dow Jones Industrial Average fell 0.5% Thursday as oil prices surged past $100 a barrel for the first time since May and a hotter-than-expected wholesale inflation reading pushed Treasury yields higher. The S&P 500 dropped by the same margin while the Nasdaq composite and Russell 2000 also slipped, with major benchmarks headed for a fourth straight day of declines ahead of next week's Federal Reserve meeting.
Fears of inflationary pressure tied to the ongoing U.S.-Iran war weighed on stocks Thursday, and a surprise wholesale inflation print gave investors no relief. In late-morning trade, the Dow Jones Industrial Average fell 0.5%. The S&P 500 matched that with a 0.5% decline. The Nasdaq composite slipped 0.3%, and the Dow, S&P 500 and Nasdaq were on track for their fourth consecutive day of declines. The small-cap Russell 2000 index moved down 0.6%.
Oil Surges Past $100 a Barrel
Equities took a hit as West Texas Intermediate crude futures moved above $100 a barrel for the first time since May, trading up 4% to $99.80. Brent crude also rose 4% to trade above $104, after earlier touching $105. As a result, the 10-year Treasury yield jumped eight basis points to 4.92%, with traders anticipating that higher oil prices will feed further into inflation.
Wholesale Inflation Comes In Hot
Early Thursday, the Labor Department said the producer price index rose 0.4% in August, matching estimates, with a 5.4% annual increase that came in slightly hotter than expected. Core PPI, which strips out food and energy, rose 0.2% — slightly cooler than estimates — for a 4.6% year-over-year increase in line with forecasts.
The report landed ahead of next week's Federal Reserve meeting on interest rates, and Friday's consumer price index will likely weigh further on that decision.
Dow Movers: Chevron Gains as Amazon, Microsoft Slip
Among the Dow's components, Chevron shares rallied 1.6%, extending a winning streak to three sessions. Amazon and Microsoft each lost 0.8% in premarket action, dragging on the blue-chip index even as Chevron advanced.
Source: Investor's Business Daily
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