At the close of yesterday's trading, US stock indices advanced amid a decline in oil prices. The biggest gainers were the companies in the tech sector, as well as the consumer goods and services sectors. The Dow Jones Industrial Average jumped by 1.8% to 3,3544.34, the S&P 500 rose by 2.1% to 4,262.45, and the Nasdaq Composite gained 2.9%, trading at 1,2948.62.
Shares of the Walt Disney Company (+4.01%), Microsoft Corporation (+3.87%), and Procter & Gamble Company (+3,64%) showed the biggest growth among companies included in the Dow. Shares of Chevron Corp (-5.00%), Down Inc (-2.37%), and Caterpillar Inc (-0.44%) dropped the most. As for the companies included in the S&P 500, Monolithic Power Systems Inc (+9,56%), American Airlines Group (+9,26%), and United Airlines Holdings Inc (+9,19%) stocks demonstrated a steady rise. Valero Energy Corporation (-6.81%), Baker Hughes Co (-5.71%), and Exxon Mobil Corp (-5.65%) reported the biggest losses. In the Nasdaq Composite, Sonim Technologies Inc (+103,33%), Incannex Healthcare Ltd ADR (+48,47%), and Jaguar Health Inc (+44,53%) showed the best results. Evolv Technologies Holdings Inc (- 43,14%), Cepton Inc (- 28,79%), and Better Therapeutics Inc (-22,96%) saw a big decline.
On the NYSE stock exchange, the number of shares that incurred losses (2,203) exceeded the number of those that added gains (985). At the same time, the shares of 117 companies remained unchanged. On the NASDAQ stock exchange, stocks of 2,429 companies declined, while the shares of 1,370 companies increased, and 171 closed at the level of the previous session. The CBOE Volatility Index, or VIX, based on options of the S&P 500 Index, fell by 6.11% to 29.83. On Tuesday, oil prices tumbled below $100 per barrel. WTI lost more than 6%, trading at $96.44 per barrel. Brent Crude also dropped by more than 6% to $99.91 per barrel.
Experts note that a negative correlation has been seen in the stock market. When oil prices rise, the stock market falls and vice versa. Oil prices sank ahead of the FOMC meeting, especially the key rate decision. The watchdog is widely expected to hike the key rate for the first time since 2018. The two-day meeting began the day before. Policymakers discussed the highest level of inflation in four decades and the consequences of the conflict between Russia and Ukraine for the global economy.
Geopolitical tensions in eastern Europe may trigger a new surge in inflation due to the ban on oil, metals, and grain from Russia. These factors are likely to adversely affect the global economy. Importantly, it has almost revived from the coronavirus crisis. Traders also digested the US Producer Price Index data. According to the US Department of Labor, the seasonally adjusted Producer Price index grew by 0.8% in February compared to an increase of 1.2% in January. What is more, speculators are trying to figure out the consequences of lockdowns in China for global demand. The leading Chinese stock indices are declining now.
The main bearish factor for stock markets in recent days has been an uptick in new coronavirus cases in the country, as well as regulatory pressure from China's government. Thus, the daily number of infections in China has doubled. The government had to introduce quarantine measures in some large cities. The Hang Seng index sank by 5.7%, dropping to a six-year low. In addition, shares of large tech and financial companies have significantly decreased as well.
The decline in spending by Chinese consumers on travel and retail trade along with disruptions in supply chains are putting pressure on the global economy, weakened by the conflict in Ukraine and the highest inflation since 1982. Intimidating media headlines about Covid-19 outbreaks in China escalate even more the uncertainty in global markets.
