Oil price below $100 a barrel
Inflation concerns have subsided slightly / Reuters
New York stocks rose as oil prices fell below $100 a barrel a day before the results of the Federal Reserves Federal Open Market Committee meeting. The downtrend in the stock market seems to have calmed down.
On the 15th at the New York Stock Exchange, the Dow Jones Industrial Average closed at 33,544.34, up 599.10 points from the previous day. The Standard & Poors 500 Index closed at 4,262.45, up 89.34 points from the battlefield, and the Nasdaq Index, centered on technology stocks, closed at 12,948.62, up 367.40 points from the battlefield.
Inflation concerns appear to have subsided somewhat as oil prices fall below $100 a barrel. The price of West Texas Intermediate crude oil futures fell more than 9% during the day to the level of $93 per barrel, and Brent futures price also fell more than 8% during the day to the level of $97 per barrel. WTI and Brent crude prices are down more than 20% from their peak on the 7th.
Negotiations for an end to the armed conflict between Russia and Ukraine are ongoing as investors are watching the peace negotiations between Russia and Ukraine and the regular meeting of the Federal Open Market Committee in addition to oil price movements.
Russian Foreign Minister Sergei Lavrov said at a press conference on the same day that negotiations were underway to secure Ukraines military neutrality.
It is known that Russia and Ukraine are holding the fourth peace talks on the same day in the form of a videoconference.
The EU and the UK have announced additional sanctions in response to the Russian invasion of Ukraine. The EU adopted the fourth sanctions, including restrictions on trade in steel and luxury goods, and the UK decided to ban the export of ultra-high-end luxury goods to Russia and impose an additional 35% tariff on hundreds of imported goods, including vodka.
Investors are also keeping an eye on the Federal Open Market Committees regular meeting.
The Fed is expected to raise its benchmark interest rate by 25 basis points at the meeting, and market participants will likely focus on hints regarding the pace of rate hikes going forward and shrinking the balance sheet. If the Fed raises rates, it will be the first hike since 2018.
Investors expect the Fed to raise rates by 25 basis points each for a total of seven times this year. The 10-year Treasury bond yield fell during the day, but rose to 2.158% ahead of the FOMC meeting, the highest since May 2019.
The market is also watching the risk of a Russian default. Russia has to pay interest on $117 million of dollar-denominated government bonds by today. The Russian government has announced that it will repay it in rubles, but if the interest on dollar bonds is paid in rubles, it is likely to be regarded as a default. However, even if the interest cannot be repaid immediately, there is a grace period of 30 days, so an official default will not be declared.
The US producer price index rose more than 10% year-on-year in February, maintaining the same level as the previous month. However, the month-on-month figure fell short of the previous month and expected. The February PPI rose 0.8% on a seasonally adjusted basis, below the 1.2% increase recorded in the previous month and the 0.9% increase expected by experts compiled by The Wall Street Journal.
New York stock market analysts said falling oil prices and slowing producer prices had lessened concerns about the Feds aggressive rate hikes.
Tim Murray, capital markets strategist at T. Lo Price Group, told the Wall Street Journal that if lower oil prices mean lower inflation, it means that the end of the Fed rate hike will also be lower.
CFRA chief investment strategist Sam Stoval told CNBC that the rally was driven by the markets tiredness of the stocks long run down, even if it was just a relief rally.