Crude Oil Surge Triggers Inflation Fears, Sends U.S. Stocks Lower

U.S. stocks took a hit on Tuesday as concerns over inflation resurfaced due to rising crude oil prices. The Dow Jones Industrial Average fell by 578 points, with the S&P 500 and Nasdaq also experiencing declines of 0.4% and 0.4%, respectively.

The surge in oil prices pushed the 10-year Treasury yield above 4.8% for the first time since October 2023, fueling speculation that the Federal Reserve could raise interest rates next week. Traders now assign a 58% probability to a 25-basis-point rate hike at the upcoming Federal Open Market Committee meeting.

The inflation fears were further exacerbated by a decline in U.S. Strategic Petroleum Reserve stocks, which fell by about 1.2 million barrels last week to 285.4 million barrels, its lowest level since 1982. The Brent crude price held above $97 and is up around 11% on the month.

Amgen Inc. was the single largest drag on the market, sinking 9.6%, while Tesla Inc., NVIDIA Corp., and Apple Inc. were among the few gainers, rising 3.8%, 2%, and 1.4%, respectively.