Plus   Neg

U.S. Stocks Move Moderately Lower As Oil Prices Spike

wallstreet aug27 16sep19 lt

Following the mixed performance seen last Friday, stocks have moved moderately lower in morning trading on Monday. The major averages have all moved to the downside, although selling pressure has remained somewhat subdued.

Currently, the major averages remain stuck in negative territory. The Dow is down 131.87 points or 0.5 percent at 27,087.65, the Nasdaq is down 25.08 points or 0.3 percent at 8,151.63 and the S&P 500 is down 10.30 points or 0.3 percent at 2,997.09.

The weakness on Wall Street comes amid a spike by the price of crude oil, with brent crude futures showing the biggest intraday jump on record after a coordinated drone attack on Saudi Arabia's oil industry.

Crude for October delivery is soaring $5.52 to $60.37 a barrel, raising concerns about the impact higher energy prices could have on the already fragile global economy.

The jump in oil prices comes as attacks on an oil processing facility at Abqaiq and the nearby Khurais oil field cut Saudi Arabia's daily crude oil output in half.

Responding to the news, President Donald Trump said he has authorized the release of oil from the Strategic Petroleum Reserve if necessary to keep the markets well supplied.

Trump also tweeted the U.S. is "locked and loaded" to the respond to the attacks, with Secretary of State Mike Pompeo pointing the finger at Iran.

A potential military conflict between the U.S. and Iran would weigh on a global economy that is already being dragged down by the U.S.-China trade war.

On the U.S. economic front, the Federal Reserve Bank of New York released a report showing New York-area manufacturing activity was little changed in the month of September.

The New York Fed said its general business conditions index dipped to 2.0 in September from 4.8 in August, although a positive reading still indicates an increase in regional manufacturing activity. Economists had expected the index to edge down to 4.0.

Later this week, the Federal Reserve is scheduled to announce its latest monetary policy decision, with the central bank widely expected to cut interest rates by another 25 basis points.

Trump has been pressuring the Fed for a larger rate cut, pointing to the stimulus announced by other central banks around the world.

"The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries," Trump tweeted.

He added, "They can't believe how lucky they are that Jay Powell & the Fed don't have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!"

Tobacco stocks have shown a significant move to the downside in morning trading, dragging the NYSE Arca Tobacco Index down by 1.6 percent.

Chemical and retail stocks are also seeing notable weakness, while energy stocks are moving sharply higher along with the price of crude oil.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index has spiked by 6.7 percent, the NYSE Arca Natural Gas Index is up by 3.9 percent and the NYSE Arca Oil Index is up by 2.3 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a holiday. Hone Kong's Hang Seng Index slid by 0.8 percent, while South Korea's Kospi climbed by 0.6 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has dipped by 0.3 percent, the German DAX Index and the French CAC 40 Index are both down by 0.6 percent.

In the bond market, treasuries are regaining ground after moving sharply lower over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4 basis points at 1.863 percent.

For comments and feedback contact: editorial@rttnews.com

Follow RTT