Oil Prices Soar as US Stocks Plummet Ahead of Fed Decision
The US stock market took a hit on Wednesday ahead of the Federal Reserve's decision on interest rates. The S&P 500 fell by 0.4%, while the Dow Jones Industrial Average plummeted 614 points, or 1.2%, as of 10 a.m. Eastern time.
Oil prices surged, however, with Brent crude leaping 6.2% to $87.14 per barrel due to renewed violence in the Middle East and concerns over global oil supply. The price of Brent crude had swung wildly in recent days, hitting as low as $72 early this month and as high as $102 last week.
The sharp swings in oil prices have raised worries that inflation may accelerate, just when it seemed to be slowing down more than expected. This uncertainty has traders on edge about what the Federal Reserve will announce after its two-day meeting on interest rates concludes later today.
Traders are giving a 36% probability of the Fed raising its main interest rate, which would be the first increase in three years. Higher rates can help keep inflation under control but may also slow down the economy and hurt stock prices.