Higher Oil Price and Inflation Worries Weighed On U.S. Stocks

Barry Adams
12 Sep, 2023
New York City

Stocks on Wall Street traded lower and higher crude oil prices weighed on market sentiment. 

Popular market indexes traded down ahead of two inflation reports and retail sales data later in the week. 

Crude oil jumped to a new 10-month high on the supply worries and sustained demand despite the recent increases in prices. 

Energy stocks led gainers in early trading, following the rise in crude oil prices after the OPEC estimated global crude oil demand to grow by 225 million barrels per day, but lower than 2.44 million barrels per day increase estimated in 2023. 

Investors are awaiting consumer price inflation data on Wednesday and economists are expecting core inflation rate to hold steady but overall inflation may edge slightly lower in August 

 

U.S. Indexes & Yields 

The S&P 500 index traded down 0.2% to 4,471.24 and the Nasdaq Composite eased 0.4% to 13,8536.20. 

The yield on 2-year Treasury notes decreased to 5.01%, 10-year Treasury notes inched lower to 4.28% and 30-year Treasury bonds edged down to 4.37%. 

Crude oil increased $1.40 to $88.70 a barrel and natural gas prices increased 0.06 cent to $2.67 a thermal unit. 

The dollar index edged lower to  104.90 mark and hovered near the 105 mark reached last week but higher than the low of 99.85 on July 13. 

Last week, the dollar index, which tracks the price of the U.S. dollar against major currencies, halted a five-day rally Friday but extended gains to the eight week in a row and rose to a six-month high on the expectations of higher interest rates. 

 

U.S. Stock Movers 

WestRock agreed to merge with Smurfit Kappa and form one of the largest packaging companies in the world. 

Smurfit WestRock, the newly formed holding company will be headquartered in Dublin, Ireland and will be listed on the London Stock Exchange and the New York Stock Exchange. 

WestRock stockholders will receive one Smurfit WestRock share and $5 cash and Smurfit Kappa shareholders will receive one share of the newly formed company. 

Smurfit Kappa shareholders will own 50.4% of the newly merged company. 

The combined packaging company will have about $34 billion in annual sales with about 65% of the revenue located in the Americas. 

WestRock jumped 7.7% to $36.75 and Smurfit Kappa Group Plc declined 8.0% in London trading to 2,824.0 pence. 

Oracle Corp dropped 9.2% to $126.71 after the database company reported weaker-than-expected revenue in the fiscal first quarter. 

Revenue in the quarter was $12.45 billion and adjusted earnings per share was $1.19, both fell short of some analysts' expectations. 

The company also guided lighter-than-expected revenue growth in the fiscal second quarter between 5% and 7% and adjusted earnings per share between $1.30 and $1.34. 

Cloud services and license support segment revenue increased 13% from a year ago to $9.55 billion but the cloud license and on-premises license segment revenue decreased 10% to $809 million.    

Hardware revenue fell 6% to $714 million. 

Casey's General Stores Inc jumped 4% to $246.30 after the retail chain reported better-than-expected quarterly results. 

Quarterly revenue increased to $3.87 billion and diluted earnings per share rose to$4.52.