Wall Street closes lower due to a jump in oil prices, while indexes post monthly gains
?U.S. Stocks fell on Monday as Wall Street turned the page on an unpredictable month. A war-related rise?in crude oil prices revived inflation concerns?and increased the likelihood of tighter policy.
Investors processed U.S. Federal Reserve Chairman Kevin Warsh's hawkish remarks at the Jackson Hole Symposium on Friday.
All three of the major U.S. indexes fell in August, but they also posted gains for the month. The Nasdaq had the highest percentage gain for August, as the AI trade continued to thrive despite recent weakness. The Dow Jones industrial average surpassed its fifth consecutive month of?advance.
Peter Tuz of Chase Investment Counsel, Charlottesville, Virginia, said: "We heard Warsh's message last week and odds are now in favor of a rate increase in September." "Add that to the mix with the continued hostilities across the Middle East."
Tuz continued, "And in the week leading up to Labor Day there aren't many people out of the office so strange things can happen." There was no reason for me to think that today would be a good day to invest in stocks.
Masoud Pezeshkian, Iran's president, said: "Tehran still seeks a negotiated resolution to the war after days of renewed exchanges of airstrikes and increasing hostilities in response to Donald Trump's imposition of costly economic sanctions."
The prolonged?impasse, and the closure of the Strait of Hormuz that accompanied it, has fueled fears that the upward pressure on the energy prices may spread into a systemic inflation which could force the Fed's interest rate to be raised as early as next month.
According to CME's FedWatch, the financial markets currently price in a probability of more than 65% that the central bank will implement a rate hike of 25 basis points at the conclusion September's meeting on monetary policy.
Paul Nolte is a senior wealth advisor & Market Strategist at Murphy & Sylvest, located in Elmhurst. He said, "Investors have been revisiting the Jackson Hole comments Warsh made and are evaluating what it may mean to interest rates and inflation." If they don't hike rates by September, I think the market will react strongly because they have been preparing for this since quite a while.
The S&P 500 fell 27.39 points or 0.36% to 7,684.37, and the Nasdaq Composite dropped 41.51 points or 0.16% to 26,360.91. The Dow Jones Industrial Average dropped 380.22, or 0.71% to 53179.77.
Energy?shares grew the most among the 11 major S&P 500 sectors, boosted by the surging crude oil prices. Utilities lag behind after an amendment to a California senate bill, which did not do much to reduce the liability of grid operators to wildfires.
In the energy sector, Valero Energy and Halliburton both advanced. California's PG&E, a utility company, suffered its?largest percent loss in six years.
Other movers include GameStop, which saw its shares rise after it announced that it would pay 27% of the previously announced $1.4 Billion debt exchange via cash on hand, rather than issuing new stocks, preventing any further share dilution.
(source: Reuters)
