[New York Stock Market] Inflation Concerns Rise Amid Soaring Oil Prices... Nasdaq Down 1.32%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed lower on the 23rd (local time) amid Western moves for additional sanctions against Russia and the resulting rise in oil prices. As West Texas Intermediate (WTI) crude oil approached $115 per barrel, inflation concerns grew, freezing investor sentiment.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,358.50, down 448.96 points (1.29%) from the previous session. The large-cap-focused S&P 500 index fell 55.37 points (1.23%) to 4,456.24, and the tech-heavy Nasdaq index dropped 186.21 points (1.32%) to 13,922.60. The small-cap Russell 2000 index declined 36.14 points (1.73%) to 2,052.21.

By sector, energy stocks rose following the increase in oil prices. Marathon Oil, a leading energy stock, closed up 3.73% from the previous session, hitting its highest level in 52 weeks. Schlumberger also ended the day up 2.94%.

GameStop's shares surged nearly 15% after news that Chairman Ryan Cohen purchased 100,000 shares of the company. Food manufacturer General Mills' stock rose more than 2% after reporting better-than-expected earnings.

On the other hand, Adobe slid about 9% due to earnings that fell short of market expectations. Moderna's stock also plunged over 4% after a study revealed relatively low effectiveness of its COVID-19 vaccine in children under five years old.

Investors on this day focused on new developments surrounding Ukraine, paying close attention to oil price movements, inflation concerns, and government bond yields. Susanna Streeter, Senior Analyst at Hargreaves Lansdown, said, "There is real pressure on oil prices, which exacerbates inflation concerns," diagnosing that the surge in oil prices is a significant burden on stock prices. She added, "The situation remains highly sensitive to events unfolding in Ukraine."

With the NATO summit, the Group of Seven (G7) summit, and the European Union (EU) summit scheduled for the 24th, additional Western sanctions against Russia are expected. It remains to be seen whether the EU will follow the U.S. and the U.K. in imposing energy sanctions equivalent to the ban on Russian oil imports.

Steven Innes, Manager at SPI Asset Management, said, "The EU summit and NATO summit will be a turning point for the oil market," adding, "New sanctions against Russia will be announced."

On this day, international oil prices surpassed $110 per barrel again amid growing supply concerns. The May WTI contract on the New York Mercantile Exchange closed at $114.93 per barrel, up $5.66 (5.2%) from the previous session. This is the highest closing price since March 8. WTI showed strength from the opening as news emerged that Russia's oil exports could be disrupted due to facility damage caused by storms and bad weather, increasing supply uncertainty.

The rise in oil prices is also heightening inflation concerns. The yield on the U.S. 10-year Treasury note briefly hit 2.41% during the trading session. Although the 10-year yield is currently down from the previous session, hovering around 2.3%, it is still considered high compared to the low 1.7% levels seen earlier this month.

Federal Reserve Chairman Jerome Powell has previously indicated the possibility of a so-called "big step" of a 0.5 percentage point rate hike if inflation worsens. At an event hosted by the Bank for International Settlements (BIS) on this day, he made no specific comments regarding monetary policy. However, voices supporting a 0.5 percentage point hike continue within the Fed, which also exerts upward pressure on bond yields.

Gold, a representative safe-haven asset, also showed an upward trend. Gold futures traded up 1.29% at $1,946.4 per ounce. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," moved above 23, up more than 2% from the previous session.