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Stocks fell Thursday to close out a turbulent quarter in the red as investors weighed a decision by President Joe Biden to carry out the largest oil release ever from the country’s strategic petroleum reserve in an effort to mitigate spiking energy prices.
The S&P 500 tumbled 1.6%, and the Dow Jones Industrial Average erased 550 points. The Nasdaq Composite declined 1.5%. The moves mark the worst quarter for stocks in two years. Oil prices extended a streak of recent swings, with WTI crude oil futures dropping 6.6% to about $100 per barrel.
President Joe Biden unveiled plans to release 1 million barrels of oil a day starting May for the next six months from the U.S. Strategic Petroleum Reserve in the largest release ever to try to curb surging gasoline prices, the president said in an event at the White House on Thursday. Energy prices have skyrocketed in recent months, particularly after Russia’s Feb. 24 invasion of Ukraine.
“This is a moment of consequence and peril for the world, and pain at the pump for American families,” Biden said.
“Our prices are rising because of Russian President Vladimir Putin’s actions,” he said. There isn’t enough supply. And the bottom line is if we want lower gas prices we need to have more oil supply right now,” Biden said.
Meanwhile, Russian forces continued attacks on Kyiv and northern Ukraine despite reports Moscow pledged to ease its military action in the areas during peace talks in Istanbul earlier this week. As of Wednesday, the number of people in Ukraine who have fled their homes to escape the invasion and seek safety reached 4 million, according to the United Nations.
Stocks have had a turbulent start to the year as a number of headwinds — geopolitical turmoil, rising inflation, supply chain imbalances, and central bank monetary tightening — roil financial markets. Still, the S&P 500 is up 11% from its lowest level of the year in early March as of Tuesday’s close and just 4% shy of notching a new all-time high after a recent comeback. Based on more than seven decades of data, the momentum is likely to continue even despite some day-to-day choppiness.
he good news is stocks really appear to love April,” LPL Financial chief market strategist Ryan Detrick said in a note, pointing out the month has closed green every year since 2006 except for 2012. “Not only is it the best month on average since 1950, but it has also been higher an incredible 15 of the past 16 years as well.”
Despite a reassuring outlook for the month ahead, another historical track record has been worrying market participants. Investors are nervously eyeing a flattening U.S. Treasury yield curve, with longer-duration bond yields falling more sharply than those on the short end as traders bet on higher rates from the Federal Reserve in the near-term and weigh a clouded macroeconomic outlook over the longer-term.
The spread, or difference, between the 2-year and 10-year Treasury note yields narrowed to its lowest level since 2019 earlier this week and briefly inverted on Tuesday. The phenomenon has a history of predicting a recession, with each of the last eight recessions dating back to 1969 preceded by a yield curve inversion.
“We want to make sure we don’t get too focused on the yield curve issues where some folks are thinking that’s signaling a recession,” JoAnne Feeney, Advisors Capital Management partner and portfolio manager, told Yahoo Finance Live, however. “We think it’s very dangerous at this point to use historical episodes of yield curve inversion to try to predict what will happen now.”
Feeney pointed to near-record high job openings (the Labor Department’s Job Openings and Labor Turnover Summary [JOLTS] came in at 11.283 million in January) and said the U.S. economy is still coming out of COVID and COVID-type behavior.
The Labor Department’s weekly jobless claims out Thursday show initial unemployment claims ticked up slightly from the prior read to 202,000 after setting a 50-year low. Economists had forecast a reading of 196,000, according to Bloomberg data.
In a busy week for labor market reports, ADP also reported Wednesday private sector payrolls rose by 455,000 in this past month as the economy faced ongoing labor shortages and widespread vacancies.
4:00 p.m. ET: All major indexes fall to close out a turbulent quarter lower
Here’s how the S&P 500, Dow, and Nasdaq capped the last trading session of Q3:
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