Wall Street, global markets partly recover after early sell-off sparked by
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A sell-off for stocks wrapped around the world and hit Wall Street Tuesday, though the losses eased significantly as the day progressed. Oil prices, meanwhile, leaped even higher on worries about the widening war with Iran.
The S&P 500 dropped as much as 2.5 per cent Tuesday morning because of worries that the war may do more sustained damage to the economy than feared. But the index at the heart of many 401(k) accounts trimmed its loss and was down a more modest 0.9 per cent by the end of the trading day.
The Dow Jones Industrial Average was down 403 points, or 0.8 per cent, after plunging more than 1,200 points in the morning. The Nasdaq composite pared its loss to one per cent.
It was just a day ago that U.S. stocks opened the morning with sharp losses, only to recover all of them and end the day with slight gains. But that was with the caveat that oil prices did not jump too high, such as above $100 US per barrel.
On Tuesday, oil prices rose again and raised more alarms. The price for a barrel of Brent crude, the international standard, briefly leaped above $84 US. But that jump lessened through the day, and Brent settled at $81.40 US, up 4.7 per cent. A barrel of benchmark U.S. crude rose 4.7 per cent to $74.56 US.
Oil prices made the leap as Iran struck the U.S. Embassy in Saudi Arabia, part of a widening of targets that also includes areas critical to the world’s oil and natural gas production.
Worries are particularly high about what will happen to the Strait of Hormuz off the coast of Iran, a narrow passageway where roughly a fifth of the world’s oil passes, making it crucial for the global flow of crude.
Iranian Brig.-Gen. Ebrahim Jabbari, an adviser to the paramilitary Revolutionary Guard, declared that the Strait of Hormuz is closed, vowing that any ships that passed through it would be set on fire.
Questions about how long this war may continue are making things uncertain for markets.
“It’s apparent now that this may take a few weeks,” said Thomas Hayes, chairman and managing member at Great Hill Capital, in an interview with CBC News.
“There are some variables that are coming into play that maybe the market wasn’t ready for — in terms of the different attacks that Iran has made and the different implications with the Strait of Hormuz being closed and the impact on energy prices, which affects inflation, which affects the Fed’s ability to cut rates further, et cetera,” he said.
Oil prices rose again on Tuesday as the U.S. and Israel launched another wave of attacks on Iran — and Iran responded with strikes targeting Israel and U.S. allies in the Persian Gulf. Global stock markets were…
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