2 days ago
Dow Futures Slide as Oil Prices Rise After Weekend Attacks
U.S. stock-market futures fell when trading reopened after a holiday.
The Dow futures dropped by more than 300 points.
Investors were worried because oil prices rose after reports of more attacks in West Asia.
Brent oil came close to $100 per barrel.
News reports said Saudi Aramco facilities in Jazan may have been attacked, but this was not independently confirmed.
Higher oil prices can make many goods and services more expensive.
Investors are also watching whether high bond yields could hurt stock prices.
Important producer- and consumer-price reports are due later this week before the Federal Reserve’s next interest-rate decision.
Dow futures fell more than 300 points as Wall Street resumed trading after the Labor Day holiday.
S&P 500 and Nasdaq futures dropped about 20 points each, while Asian technology stocks had outperformed.
Brent crude approached $100 a barrel amid reported attacks in West Asia and concerns about shipping through the Strait of Hormuz.
Reports said Saudi Aramco facilities in Jazan were attacked again, but there was no independent confirmation or damage estimate.
Goldman Sachs warned oil could reach $120 a barrel if Strait of Hormuz shipping attacks broaden, while key inflation data is due later this week.
- Who
- U.S. stock-market investors, oil traders, financial institutions, and companies including Saudi Aramco are central to the report.
- What
- Dow futures fell more than 300 points, while S&P 500 and Nasdaq futures declined about 20 points each as oil prices rose.
- Where
- The market reaction occurred in the United States, amid reported attacks in West Asia and concerns involving the Strait of Hormuz and Jazan.
- When
- Trading resumed after the Labor Day holiday; producer-price data is due Thursday and consumer-price data Friday.
- Why
- Markets were reacting to reported attacks, higher oil prices, elevated bond yields, and upcoming inflation data before the Federal Reserve’s interest-rate decision.
Bearish Market Risks
Potential Market Support
Oil and geopolitical pressure
Bearish Market Risks
Investors and analysts cited reported attacks and possible disruption to Strait of Hormuz shipping as risks that could push oil toward $120 a barrel and weigh on stocks.
Potential Market Support
Iran reportedly suggested that a deal with Oman to manage the Strait of Hormuz was nearing completion, which could reduce some shipping concerns if finalized.
Equity-market direction
Bearish Market Risks
Rising bond yields, higher oil prices, and warnings from Societe Generale, JPMorgan, and Barclays point to possible additional pressure on equities.
Potential Market Support
Technology stocks outperformed in Asia, which could provide some support to U.S. technology-heavy indexes such as the Nasdaq.
Jazan facility reports
Bearish Market Risks
Financial Times and Bloomberg reports said Saudi Aramco facilities in Jazan were attacked again, adding to market concerns.
Potential Market Support
The reports had no independent confirmation, and neither the extent of damage nor those responsible had been established.
Key facts
- Dow futures
- Down more than 300 points after the extended Labor Day weekend.
- S&P 500 and Nasdaq futures
- Each down about 20 points.
- Brent crude
- Near $100 a barrel, according to the report.
- Potential oil risk
- Goldman Sachs warned prices could reach $120 a barrel if Strait of Hormuz shipping attacks intensify.
- U.S. 10-year yield
- Near 4.8%; Societe Generale warned that 5.5% could trigger a negative equity-market reaction.
- Gold reserves
- China’s central bank increased its gold reserves by 650,000 ounces in August, its 22nd consecutive monthly purchase.
- Upcoming data
- Producer-price inflation is due Thursday and consumer-price inflation Friday, before the Federal Reserve’s next rate decision.
Sources
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