Oil prices soared as concerns about the potential ripple effects of violence in the Middle East escalated. However, the stock market showed less apprehension and rebounded from minor morning losses after receiving potentially positive news on interest rates, which have been the primary cause of the Wall Street downturn since the summer.
- The S&P 500 surged 27.16 points, a 0.6% increase, reaching 4,335.66.
- The Dow Jones Industrial Average climbed 197.07 points, or 0.6%, to 33,604.65.
- The Nasdaq composite rose by 52.90 points, a 0.4% increase, reaching 13,484.24.
All three indices experienced a surge after two Federal Reserve officials suggested that there may not be a need to further raise interest rates at their upcoming meeting on November 1st. They believe that the recent jump in long-term bond yields may alleviate inflation concerns without the need for additional market-rattling rate hikes by the Fed, according to the AP.
This news injected some life into the stock market, effectively erasing earlier losses. The S&P 500 had initially dropped by 0.6% following an unexpected attack by Hamas against Israel, which subsequently declared war. Although the conflict does not directly impact major oil production areas, fears of its spillover effects on the crude market contributed to a $3.59 increase in US oil prices, now valued at $86.38 per barrel. Brent crude, the international standard, also rose by $3.57 to $88.15 per barrel. Barclays energy analyst Amarpreet Singh suggests that one possible outcome of this violence is a slowdown in Iranian oil exports, which have been on the rise this year.
As a result of Monday’s surge in crude oil prices, oil and gas stocks saw significant gains on Wall Street. Marathon Oil experienced a 6.6% increase, while Halliburton climbed 6.8%. Defense contractors involved in weapons production also performed exceptionally well, with Northrop Grumman rallying 11.4% and L3Harris Technologies gaining 10%. Conversely, companies heavily reliant on fuel expenses faced setbacks. United Airlines saw a 4.9% decline, while Carnival fell 4.3%. Major airlines have suspended flights to Israel due to travel advisories issued by the US State Department, citing the potential for terrorism and civil unrest.
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