Stock Market Today: Dow Drops, Oil Prices Rise, Alibaba Jumps
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Wall Street returns from the Memorial Day holiday.
Angela Weiss/AFP via Getty Images
Stocks were falling Tuesday, as oil prices gained after Europe placed more restrictions on Russian oil.
Dow Jones Industrial Average
futures have retreated 218 points, or 0.7%, while
S&P 500
futures have declined 0.7%.
Nasdaq Composite
futures were down 0.4%.
The price of oil jumped 3% to more than $118 a barrel, a level it hasn’t seen since early March, when it became clear that Russia was launching a full invasion of Ukraine. The move comes after the European Union said it would impose an oil embargo on Russia, which would include the vast majority of Russian oil imports by the end of the year. Pipeline exports of oil, specifically, will continue.
Higher oil prices could mean trouble for the stock market. If the price of oil stays elevated, it could bring inflation up slightly. High inflation has already been a problem, as companies have seen higher costs and falling profit margins, forcing them to lift prices, a threat to consumer demand. The latest inflation result in the U.S. showed that the rate of price increases is declining, and higher oil could get in the way of the progress.
The other issue is that the Federal Reserve is trying to combat inflation by lifting short-term interest rates, a move that is likely to dent economic growth. The Fed implied recently that it could slow down the pace of rate hikes as the economy slows, so markets do not want to see evidence that the pace of rate hikes will be on the faster side.
As if to reinforce this point, Fed Governor Christopher Waller said he was willing to raise rates above the so-called neutral rate if it meant getting inflation heading back toward 2%. “Waller took back the punchbowl from the one week reprieve equity and bond markets had last week,” wrote NatAlliance Securities’ Andrew Brenner.
What’s more, concerns about inflation, the Fed, oil prices, and the like—what are known as macroeconomic factors—are likely to have a bigger impact on day-to-day stock market moves now that earnings season is over. That’s because investors will be left to guess how these factors will impact corporate profits for the next couple of months, rather than having companies tell them how these forces are impacting them.
“Macroeconomic cross currents remain high, and uncertainty about the path of inflation, policy, and growth is elevated,” wrote Dennis DeBusschere, founder of 22VResearch. “For now, that means …market volatility tied to major macro releases and Fed meetings.”
Outside the U.S., China began lifting some Covid restrictions, helping the
Shanghai Composite
gain 1.2%, while Tokyo’s Nikkei 225 ended 0.3% lower. The pan-European
Stoxx 600
has fallen 0.5%.
Here are five stocks on the move Tuesday:
The easing of China’s Covid-19 restrictions has seen a rally in Chinese stocks—including a number of U.S.-listed Chinese tech companies.
Alibaba
(ticker: BABA) jumped 4%, with e-commerce peer
JD.com
(JD) 6.4% higher. Electric-vehicle maker
NIO
(NIO) rallied 5.6%.
Unilever
(UL) surged 6.5%, after the consumer-products company said it appointed billionaire investor Nelson Peltz as a nonexecutive director and confirmed his Trian Fund Management holds a roughly 1.5% stake in the group.
Zoom Video Communications
(ZM) stock gained 0.7% after getting upgraded to Outperform from Underperform at Daiwa Securities.
Bob Doll of Crossmark Global Investments discusses how much more stocks need to fall before reaching the bottom, while Dana Peterson of The Conference Board previews the May jobs report.
Write to Jack Denton at [email protected] and Jacob Sonenshine at [email protected]
