Oil prices fell on Wednesday on concerns about weaker demand in the slowing global economy, as Federal Reserve Chairman Jerome Powell conceded that rate hikes could lead to a recession.
US stocks endured a choppy trading session, edging into positive territory for a while after Powell reiterated the need to counter rising inflation but warned a recession was “certainly a possibility” amid ongoing rate hikes.
But New York stocks fell again at the end of the day, although they ended with smaller losses than the major European and Asian bourses.
The S&P 500 closed just 0.1 percent lower, meaning it retained most of the gains from Tuesday’s heady session.
“The stock market had many reasons to sell aggressively into yesterday’s strength, but it didn’t,” Briefing.com said. “This resilience has fostered a sense that existing growth concerns have been appropriately priced into the market for now.”
In his opening remarks, Powell insisted that the US economy is “very strong and well positioned to deal with tighter monetary policy.”
“Inflation has obviously surprised on the upside over the past year, and more surprises could be in store for us,” the Fed chairman said in his semi-annual appearance before Congress.
Policymakers “have to be nimble” as the economy “often develops in unexpected ways,” he said.
Oil prices felt the heat of recession fears, with both major contracts falling more than 6 percent at times.
“Concerns about a global slowdown seem to outweigh any concerns about supply issues stemming from the Russian invasion of Ukraine and the prospect of Chinese demand returning,” said market analyst Michael Hewson of CMC Markets.
US President Biden asked Congress to suspend the state gas tax for three months as price hikes at the pump – largely prompted by the aftermath of President Vladimir Putin’s invasion of Ukraine and subsequent Western sanctions against Russia – fuel rising inflation have fueled.
In a televised address, Biden called for a pause in the federal gasoline tax from 18 cents a gallon through September. He also called on state governments to suspend their own taxes for the same period.
But the proposal was met with a lukewarm reception on Capitol Hill, where critics said the measure would hit key highway trust funds and said it might not bring too much relief at the pump.
U.S. gasoline prices are still very high, but a bit off their record, with the national average down to $4,955 a gallon, about six cents below the level of a week ago and below the record of , according to the American Automobile Association $5,016 as of June 14 .
– Key Figures at 2050 GMT –
North Sea Brent Crude: FALSE, up 2.5 percent at $111.74 a barrel
West Texas Intermediate: FALSE, up 3.0 percent to $106.19 a barrel
New York – Dow: down 0.2 percent at 30,483.13 (close)
New York – S&P 500: down 0.1 percent at 3,759.89 (close)
New York – Nasdaq: down 0.2 percent at 11,053.08 (close)
London – FTSE 100: down 0.9 percent at 7,089.22 (close)
Frankfurt – DAX: MINUS 1.1 percent at 13,144.28 (closing price)
Paris – CAC 40: DOWN 0.8 percent at 5,916.63 (close)
EURO STOXX 50: DOWN 0.8 percent at 3,464.64 (close)
Tokyo – Nikkei 225: 0.4 down at 26,149.55 (close)
Hong Kong – Hang Seng Index: down 2.6 percent at 21,008.34 (close)
Shanghai – Composite: down 1.2 percent at 3,267.20 (close)
Euro/dollar: rise to $1.0570 from $1.0533 late Tuesday
Pound/dollar: DOWN at $1.2263 from $1.2277
Euro/pound: up to 86.17p from 85.79p
Dollar/Yen: DOWN at 136.22 yen from 136.57 yen
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