Oil Price Spike Triggers Dow Selloff Amid Escalating Trade Tensions
US stocks closed sharply lower on Tuesday as surging oil prices revived inflation worries and pushed investors to reassess the outlook for interest rates.
The Dow Jones Industrial Average led the selloff, dropping 628 points, or 1.2%, to 52,786. The S&P 500 fell 45 points, or 0.6%, to 7,674, while the Nasdaq slipped 86 points, or 0.3%, to 26,421.
Brent crude crept toward $100 a barrel, pushing Treasury yields higher and raising concerns that inflation could remain stubborn. The 10-year U.S. Treasury yield climbed to around 4.8% as investors increasingly priced in the possibility of another quarter-point Federal Reserve rate hike at the upcoming policy meeting.
Could US-Canada trade tensions escalate further? Prime Minister Mark Carney warned Canadians that reducing their country's reliance on the United States will come at a cost, but argued that the alternative of standing still would be far more damaging. He said Canada would respond to the escalating trade war by pursuing new trade agreements and diversifying its economic relationships.
Investors are bracing for fresh clues on inflation and interest rates. The New York Federal Reserve is scheduled to release its latest consumer inflation expectations update Tuesday, ahead of producer price data on Thursday and the closely watched consumer price report on Friday.