- US stocks traded mostly lower on Tuesday as a spike in oil prices reignited inflation fears.
- If inflation reaccelerates, it could force the Federal Reserve to continue with its interest rate hikes.
- Fed Governor Chris Waller said recent economic data suggests the Fed can "proceed carefully" with further rate hikes.
US stocks traded mostly lower on Tuesday as oil prices spiked, reigniting investor fears that inflation could tick higher.
Oil prices spiked about 1% to a 10-month high after Saudi Arabia and Russia said they would continue with their oil production cuts into the end of the year.
Any reacceleration in inflation could spark the Federal Reserve to continue with its interest rate hikes, and that would catch investors by surprise. According to the CME FedWatch Tool, futures are currently pricing in no more interest rate hikes for this cycle and a potential interest rate cut by May 2024.
Federal Reserve Governor Christopher Waller told CNBC on Tuesday that the Fed can "proceed carefully" with further interest rate hikes. "There is nothing saying we need to do anything imminent," he said of additional increases, basing his view on recent economic data.
Investors are awaiting more Fedspeak later this week to ascertain whether more interest rate hikes in store.
Here's where US indexes stood at the 4:00 p.m. closing bell on Tuesday:
- S&P 500: 4,496.83, down 0.42%
- Dow Jones Industrial Average: 34,641.97, down 0.56% (-195.74 points)
- Nasdaq Composite: 14,020.95, down 0.08%
Here's what else happened today:
- The strike in Hollywood has wiped out $5 billion from California's economy. Warner Brothers Discovery warned that the strike could hurt the company's 2023 earnings by $500 million.
- The chances of a US recession have dropped to just 15% now that the Fed is probably done with hiking interest rates, according to Goldman Sachs.
- As the US dollar loses some influence in global oil markets, it could mean that a partial de-dollarization movement can pick up steam, according to JPMorgan.
- Chinese property giant Country Garden paid its dollar bond interest within its grace period, narrowly averting a default.
- Technical analyst Katie Stockton highlighted the two signals she's waiting to flash before she buys stocks.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil rose 1.22% to $86.59 a barrel. Brent, the international benchmark, jumped 1.04% to $89.95 a barrel.
- Gold fell 0.77% to $1,952.00 per ounce.
- The yield on the 10-year Treasury bond rose eight basis points to 4.26%.
- Bitcoin fell 0.42% to $25,708.