By STAN CHOE
NEW YORK (AP) — Wall Street’s big two-day rally stalled on Thursday as oil prices climbed back above $100 a barrel and increased pressure on inflation again.
The S&P 500 oscillated between small gains and losses in early trading, having jumped more than 2% on each of the previous two days for its best consecutive performance in nearly two years. It was 0.1% higher at 10:02 a.m. Eastern Time. The Dow Jones Industrial Average rose 21 points, or 0.1%, to 34,084, and the Nasdaq composite rose 0.3%.
These are the latest swings in markets as investors struggle to handicap what will happen to the economy and global inflation already high due to Russia’s invasion of Ukraine, higher interest rates highs from central banks around the world and renewed concerns about COVID-19 in various hotspots. .
A barrel of U.S. crude jumped 7.1% to $101.90, while Brent, the international standard, jumped 7.7% to $105.59 a barrel. These movements have become the norm recently, as prices have crashed due to uncertainties regarding both oil supply and demand. A barrel of US crude fell from $130 at the start of last week to nearly $94 on Wednesday.
Snatches of news about the state of negotiations between Russia and Ukraine have caused many sharp reversals. Similarly, there have been recent concerns about economic shutdowns in China due to the surge in COVID-19 infections, which could affect energy demand.
On Thursday, the Chinese government said businesses in Shenzhen, a major business hub, will be allowed to reopen as efforts to contain coronavirus outbreaks progress. Their earlier shutdowns had rattled financial markets. This followed a promise made on Wednesday to “invigorate the economy” with market-friendly policies.
The Hang Seng stock index in Hong Kong, neighboring Shenzhen, jumped 7% to continue its frantic run. Earlier this week, it went from a 5% decline to a 5.7% plunge to a 9.1% rise.
All of the wild moves come amid uncertainty about whether the economy is headed for a painful combination of stagnant growth and persistently high inflation.
Behind it all, the Federal Reserve and other central banks are trying to slow the economy enough to quell high inflation, but not so much as to cause a recession. The Bank of England was one of the most aggressive and on Thursday raised its key rate for the third time since December. A day earlier, the Fed raised its key rate for the first time since 2018.
It’s a delicate dance, and the surge in US stock prices on Wednesday seems to indicate that some investors see it succeeding.
“Far from stifling growth, the start of the Fed’s tightening cycle appears to have been warmly welcomed,” ING’s Chris Turner and Francesco Pesole said in a report. “Investors applaud measures to deal with high inflation.”
A flurry of better-than-expected reports on the US economy on Thursday may also have helped. Fewer workers filed for unemployment last week and builders broke more homes last month than economists expected. A third report, meanwhile, showed manufacturing in the mid-Atlantic region was stronger than expected. That potentially allayed some of the concerns of an earlier report that showed the weakest activity in New York state since the pandemic began.
Treasury yields were mixed. The 10-year Treasury yield fell to 2.17% from 2.19% on Wednesday night.
AP Business Writer Joe McDonald contributed.