Oil Price Surge Wipes Out Wall Street Gains Amid Inflation Fears
The global flow of crude oil has been severely disrupted due to the ongoing war in Iran, causing oil prices to surge to their highest levels since before summer. The S&P 500 fell 0.6% for a fourth straight loss, while the Dow Jones Industrial Average dropped 316 points and the Nasdaq composite sank 0.7%. Brent crude climbed another 6.3% and briefly topped $US108 per barrel, settling at $US107.63.
The increase in oil prices has had a ripple effect on inflation, with wholesale levels accelerating to 5.4% last month from 4.8% in July. This could lead to higher prices for products that rely on transportation, and retailers may eventually pass these increases onto shoppers. The Federal Reserve is likely to raise its main interest rate to combat high inflation.
The rising 10-year Treasury yield has made mortgages more expensive, hurting the housing industry. Sales of previously occupied US homes fell in August to their slowest pace in over a year.