1 hr ago
Dow Jones Drops 330 Points as Oil and Yields Rise
U.S. stocks fell again before an important Federal Reserve decision.
The Dow Jones lost 330 points, while the S&P 500 and Nasdaq also declined.
At one point, the Dow was down more than 500 points.
Government bond interest rates rose to their highest level since 2007.
Oil prices stayed above $107 per barrel.
Some oil shipments from Saudi Arabia to Europe were reportedly canceled because of a pipeline closure.
Investors are worried that higher oil prices could make inflation worse.
Most investors expect the Federal Reserve to raise interest rates by 0.25 percentage points.
They are also watching for clues about what the central bank might do next.
The Dow Jones fell 330 points, after dropping more than 500 points at its session low.
The S&P 500 declined 0.5%, while the Nasdaq lost 0.8% on Tuesday, September 15.
The 10-year U.S. Treasury yield reached 5.041%, its highest level since 2007, before ending near 5%.
Brent crude stayed above $107 a barrel after some Saudi oil cargoes to Europe were reportedly canceled.
Markets are awaiting the Federal Reserve decision, with CME FedWatch showing a 94% chance of a 25-basis-point rate increase.
- Who
- Wall Street investors, the Federal Reserve, Saudi Arabia, and oil-market participants.
- What
- U.S. stocks declined as Treasury yields and oil prices remained elevated ahead of an expected Federal Reserve rate decision.
- Where
- U.S. financial markets; oil shipments to Europe were affected by the East-West pipeline closure.
- When
- Tuesday, September 15, ahead of the Federal Reserve decision.
- Why
- Investors were concerned about higher borrowing costs and possible oil-supply disruptions linked to the West Asia conflict.
Market Caution
Rate-Hike Expectations
Federal Reserve decision
Market Caution
Some analysts believe holding rates or delivering a dovish increase could support markets, while the article says either outcome could raise questions about the Fed’s credibility and inflation-fighting message.
Rate-Hike Expectations
CME FedWatch indicated a 94% probability that the Federal Reserve would raise rates by 25 basis points, reflecting expectations for continued action against inflation.
Bond-yield risks
Market Caution
Bank of America’s survey found that one-third of fund managers viewed a disorderly rise in bond yields as the market’s biggest tail risk.
Rate-Hike Expectations
Higher yields can reflect expectations for tighter monetary policy, although the article says their rapid increase was weighing on stocks and increasing market concern.
Key facts
- Dow Jones
- Closed down 330 points; it fell more than 500 points at the session low.
- S&P 500
- Declined 0.5%.
- Nasdaq
- Declined 0.8%, with losses limited by buying in some AI-linked companies.
- 10-year Treasury yield
- Reached an intraday high of 5.041%, the highest level since 2007, and ended near 5%.
- Brent crude
- Remained above $107 per barrel.
- Expected Fed move
- CME FedWatch indicated a 94% probability of a 25-basis-point rate increase.
- Oil shipments
- Some Saudi crude cargoes scheduled for delivery to Europe in late September were reportedly canceled.
Sources
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