U.S. stock indices fell following Iran's statement on the Strait of Hormuz
U.S. stock indices fell on August 11 after Iran stated that the Strait of Hormuz would remain closed until its conditions were met. Against the backdrop of this statement, oil prices rose: the price of Brent crude once again exceeded $88 per barrel, Fortune reports, citing Bloomberg.
As of 2:08 p.m. New York time, the S&P 500 was down 0.3%, erasing earlier gains. The tech-heavy Nasdaq 100 fell 0.4%. Shares of major technology companies weighed most heavily on the S&P 500, while stocks in the energy, utilities, and industrial sectors rose.
Mark Hackett, chief strategist at Nationwide Funds Group, noted that the lack of progress on a peace deal in Iran and rising oil prices were putting moderate pressure on stocks. At the same time, he said that following last week’s rally, investors are taking this news relatively calmly.
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Trading took place ahead of the release of U.S. consumer and producer price data, which should help assess the likelihood of a rate hike by the Federal Reserve in September. According to data compiled by Bloomberg, following the rise in oil prices, the market once again estimated the probability of such a move at nearly 50%.
Analysts have differing views on the short-term outlook for inflation and interest rates. Douglas Beatt, global strategist at Wells Fargo Investment Institute, pointed to high prices for petroleum products and greater resilience in core inflation in the services sector, particularly in housing rents and healthcare. Meanwhile, Citigroup analyst Andrew Hollenhorst expects the CPI data to show a cooling of prices outside the energy sector.
According to the median forecast of economists surveyed by Bloomberg, the U.S. Consumer Price Index was expected to rise by 0.1% in July after falling by 0.4% the previous month. Bloomberg Economics projected that the annual core inflation rate could fall to its lowest level since March 2021. The firm also expected energy prices to reduce the overall inflation rate by 11 basis points.
