Oil Price Spike Weighs on Wall Street as Inflation Concerns Mount
U.S. stocks declined on Tuesday as oil prices continued to rise due to ongoing fighting in the war with Iran.
The S&P 500 fell 0.4%, while the Dow Jones Industrial Average dropped 520 points, or 1% by 10 a.m. Eastern time. The Nasdaq composite also decreased by 0.3%.
Oil prices increased as Brent crude rose 1% to $97.95 after briefly reaching $99.46. This is up from around $72 over the past two months, reflecting growing concerns about oil tanker access through the Strait of Hormuz.
Higher oil prices exacerbate worries about inflation, which remains a key concern for the U.S. economy. On Thursday, the August wholesale inflation report will be released, with economists predicting an acceleration to 5.4% from July's 4.7%. The consumer price index (CPI) report on Friday is expected to show a slight easing to 3.3% from July's 3.4%, but this remains above the Federal Reserve's target of 2%.
The Fed will meet next week to decide whether to raise, lower, or maintain interest rates. A rate hike could slow the economy and curb inflation, but President Donald Trump has been advocating for lower interest rates. The market is currently pricing in a 58% probability of a rate increase after the meeting on September 16.