Stocks drop after EU agrees to partial ban on Russian oil news

U.S. stocks opened lower on Tuesday after the European Union agreed to ban most Russian oil imports by the end of the year, triggering a recent spike in international oil prices.

As Wall Avenue moved away from a bear market Friday, inflation and rising interest rates, the war in ukraine and the slowdown in the Chinese financial system are hurting equities and raising fears of a potential recession in the United States.

The S&P 500 slipped 27 points, or 0.6%, to 4,131 in early trade. The benchmark index is down 13% over the year. The Dow Jones Industrial Common and the tech-heavy Nasdaq each fell 0.7%.

The oil jumps

Oil prices, which have soared nearly 60% this year, rose another 3% and approached $120 a barrel early Tuesday after the EU said it could embargo most imports of Russian oil because of its brutal invasion of Ukraine.

The pact was crafted at a summit aimed at serving Ukraine with a long-delayed package of latest financial aid. The embargo covers Russian oil introduced by sea, allowing a brief exemption for imports delivered by pipeline. This was essential to get landlocked Hungary on board, a call that required consensus.

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Benchmark U.S. crude oil gained $3.52 to $118.59 a barrel in digital buying and selling on the New York Mercantile Exchange. It added 98 cents to $115.07 a barrel on Monday.

Brent crude, used as a premise for pricing global buys and sells, rose above $1.72 to $119.32 a barrel.

Biden to debate inflation with Powell

President Joe Biden will meet with Federal Reserve Chairman Jerome Powell on Tuesday as hovering inflation continues to eat away at people’s incomes.

Tuesday’s meeting would be the first since Biden reappointed Powell to lead the central bank and weeks after the Senate confirmed a second term. The White House said the pair would focus on the state of the US and international financial system and in particular the four-decade-long excessive inflation, described as Biden’s “high financial priority”.

Many massive tech stocks, considered among the most sensitive to rising interest rates, have already fallen more than 20% this year. This includes a 37.2% drop for Tesla and a 69.1% drop for Netflix.

This is a sharp turnaround from the highly efficient run Wall Avenue loved after emerging from its last bear market in early 2020, first from the pandemic.

With inflation at its peak highest level in 4 years, the Fed has gone from keeping interest rates super low to help the markets and the financial system and is increasing charges and doing various strikes to curb inflation. The fear is that it would go too far or too soon.

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Goldman Sachs economists recently put a 35% chance of a US recession over the next two years, while TD Securities analysts predict “some moderation in growth and inflation.”

Inflation has been painfully excessive During months. However, market concerns increased following Russia’s invasion of Ukraine. costs are skyrocketing extra at grocery stores and gas pumps, as the region is an important source of energy and grain.

Including the pressure on equities are indicators that corporate earnings are slowing and could possibly be affected by inflation as well.

The US greenback slipped to 127.29 Japanese yen from 127.87 yen on Friday night. The euro fell from $1.0564 to $1.0593.


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Felix J. Dixon