Jump in Oil Prices Fans Inflation Fears

But it also lifted energy stocks
By Newser Editors and Wire Services
Posted Apr 3, 2023 3:31 PM CDT
Jump in Oil Prices Lifts Energy Stocks
A pump jack sits idle in front of palm trees on June 9, 2021, in Signal Hill, Calif.   (AP Photo/Jae C. Hong, File)

Stocks closed mixed on Wall Street Monday as big gains for energy stocks offset losses for some big technology stocks. The S&P 500 rose 15.20 points, or 0.4%, to 4,124.51. The Dow Jones Industrial Average rose 327 points, or 1%, to 33,601.15. The Nasdaq composite fell 32.45 points, or 0.3% to 12,189.45. Exxon Mobil had its biggest gain of the year so far and other oil producers also leaped after Saudi Arabia and other producers said they’ll cut production by 1.15 million barrels per day from May until the end of the year, the AP reports. That sent oil up 5.6% and lifted stocks of energy companies, including a 5.9 rise for Exxon Mobil, a 9.9% leap for Marathon Oil, and a 3.8% gain for BP.

Oil’s jump raises fears about inflation and dents one of the hopes that has helped steady stocks recently, that sharp hikes to interest rates may soon end. While oil's jump helps energy producers, it also weighs on much of the rest of the market. Beyond raising gasoline prices and other costs for everyone, it also dents one of the main themes that helped stocks rise in this year's just-completed first quarter: that turmoil in the banking system and a continued slowdown in inflation could push the Federal Reserve to ease its hikes to interest rates.

On Friday, traders were leaning slightly toward the Fed holding steady at their next meeting in May, which would be the first time in more than a year that it didn’t hike rates. But following Monday’s leap for oil prices, bets built that the Fed may hike rates by another quarter of a percentage point in May, according to CME Group. Amazon was one of the heaviest weights on the index Monday after it slipped 0.9%. Tesla fell 6.1% after it said over the weekend that deliveries in the first three months of the year fell short of analysts’ expectations, even though it still set a record.

(More stock market stories.)

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