Oil Price Volatility and Inflation Concerns Send US Stocks Reeling
US stocks pulled back slightly from their records on Tuesday as investors grappled with uncertainty over oil prices, which swung wildly due to ongoing tensions with Iran.
The S&P 500 fell 0.3% for a second modest drop since setting its all-time high on Friday, while the Dow Jones Industrial Average dipped 184 points or 0.3%, and the Nasdaq composite sank 0.6%. Brent crude prices briefly jumped above $90 in the morning before falling back below $87, eventually settling at $88.91, up 1.4% from Monday.
The high oil prices are exacerbating inflation concerns, with the average cost for a gallon of regular gasoline reaching $4.01 according to AAA, up from less than $3.14 a year ago. The US government will release its latest monthly inflation reading on Wednesday, which is expected to show inflation remains high but decelerated to 3.4% in July from 3.5% in June.
The Federal Reserve's interest rate decision is also looming, with traders betting on a coin flip's chance of a rate hike at its next meeting in September. A rate increase would be the first in over three years and could anger President Donald Trump, who has been lobbying for lower interest rates.