Oil Jumps, Stock Futures Waver After Dow Enters Correction

Stock futures wavered, while bond yields and oil prices rose, a day after fears of a recession pushed the Dow Jones Industrial Average into a correction.

Futures tied to the S&P 500 edged up 0.1% Tuesday, as did those tied to the blue-chip Dow Jones Industrial Average futures. Futures linked to the technology-heavy Nasdaq-100 edged down 0.3%.

Overseas, the Stoxx Europe 600 weakened 0.2%.

Brent crude, the international oil benchmark, jumped 5% to $ 129.44 a barrel, after The Wall Street Journal reported that the US was set to imminently announce a ban on Russian oil imports.

Investors are scrambling to analyze the likely broader impact of Russia’s invasion of Ukraine and the hardening Western response. Market volatility has jumped as relations between the West and Russia have hit new lows, while soaring commodity prices have raised the prospect that global growth could take a hit and have muddied the outlook for central banks seeking to tame inflation by raising interest rates.

Despite appetite for assets perceived as havens, investors sold US Treasury notes Tuesday. The yield on the benchmark 10-Year note rose to 1.859% from 1.748% Monday. Bond yields and prices move in opposite directions.

“While there is still an element of the safe-haven trade, this is being overwhelmed by inflation concerns,” said Seema Shah, chief strategist at Principal Global Investors, said.

Gold added 1% to $ 2,014.90 a troy ounce, coming within sight of its record closing level.

Mandiant fell almost 4% ahead of the opening bell after Alphabet‘s

Google said it had agreed to buy the cybersecurity firm for around $ 5.4 billion. Uber rose 1.6% after The Wall Street Journal reported that the ride-hailing company was launching a campaign to head off efforts to classify its workers as employees, which would allow them to form unions.

On Monday, the Dow Jones index slipped into correction territory for the first time in two years, the Nasdaq Composite index fell into a bear market and the S&P 500 experienced its worst one day decline in about a year-and-a-half.

“I would say the market is in a state of shock. Given the tectonic shift we have seen, everyone is second guessing what the end game may be, ”said Brian O’Reilly, head of market strategy at Mediolanum International Funds.

The Dow Jones Industrial Average on Monday closed in correction territory for the first time in two years.


Photo:

Courtney Crow / Zuma Press

The impact has been most dramatic in commodity markets, due to Russia’s outsized role as a resource producer. Prices for oil, natural gas and key raw materials like metals and grains have soared, heaping pressure on businesses and households already feeling the pinch of rapidly rising inflation. Concerns that the US could be poised to ban imports of Russian oil have sent crude prices soaring, driving fears of recession.

“Not every recession has been caused by an oil price spike but every oil spike has caused a recession,” said Mr. O’Reilly. “This is likely to be a drawn-out affair and will have a sustained impact on commodity prices.”

In Asia, stock markets slumped, following Monday’s moves on Wall Street. Japan’s Nikkei 225 fell 1.7%, while Hong Kong’s Hang Seng index dropped 1.4% to its lowest level since 2016.

Since Russia invaded Ukraine, the US and allied countries have imposed heavy sanctions on Russia. WSJ’s Shelby Holliday dives into how these sanctions are affecting everyone from President Vladimir Putin to everyday Russian citizens. Photo: Pavel Golovkin / Associated Press

Write to Will Horner at william.horner@wsj.com

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