The Dow Jones Industrial Average fell for two consecutive sessions, Wednesday and Thursday, in the U.S. stock market.
The declines over the two trading days reflected both rising international oil prices amid developments in the Middle East and concerns about rising U.S. Treasury yields.
However, rather than explaining the index decline through a single cause, it is necessary to examine the closing prices by date and separate the variables to which the market reacted at the time.
3-Line Summary
1. The Dow Jones declined for two consecutive sessions.
2. The closing price on the 10th fell 0.60%.
3. Oil prices and Treasury yields need to be viewed together.
A 405.41-Point Decline on Wednesday and a 316.56-Point Decline on Thursday
According to a report by 자유재경, the Dow Jones Industrial Average closed Wednesday at 5만2380.66, down 405.41 points, 0.77% from the previous session. The Nasdaq Composite also fell 0.64%, while the Standard & Poor’s (S&P) 500 Index declined 0.48%. By contrast, the Philadelphia Semiconductor Index rose 0.37%. This means that the major indexes did not all move in the same direction.
A report on the U.S. market close published by Yahoo Finance then said that the Dow Jones fell 316.56 points, 0.60% on Thursday to close at 5만2064.10. It reported that the S&P 500 Index fell 0.58%, the technology-focused Nasdaq Composite declined 0.65%, and the Philadelphia Semiconductor Index dropped 2.66%.
The Dow Jones fell on both days, but the size of the declines and the sector-by-sector performance differed. In particular, the semiconductor index rose on Wednesday, whereas Thursday’s report showed the same index falling more sharply. This is why it is difficult to conclude, based only on the Dow Jones, that the entire U.S. market moved in exactly the same way.
Crude Oil Above 100 Dollars and Inflation Concerns
Both reports identified worsening conditions in the Middle East and concerns about disruptions to crude oil supplies as major market factors. 자유재경 reported that Brent crude rose above 101 dollars per barrel and West Texas Intermediate (WTI) reached 96.05 dollars, with both recording their highest closing prices since May. The explanation was that rising energy prices increased inflationary pressure and strengthened market expectations of a possible interest-rate hike by the U.S. Federal Reserve (Fed).
Oil prices differed depending on the timing. Yahoo Finance reported the November Brent crude contract at 102.44 dollars per barrel and the October WTI contract at 97.50 dollars at 7:43 a.m. U.S. Eastern Time. By contrast, Cnyes reported that Brent crude futures stood at 105.26 dollars and WTI futures at 100.04 dollars at 12:15 p.m. Greenwich Mean Time. Even on the same day, the data-collection times and contract months differed, so it is difficult to regard any single figure as that day’s fixed price.
Cnyes reported that an increase in attacks on oil tankers in the Middle East and restrictions on passage through the Strait of Hormuz heightened supply concerns. The outlet reported that Brent crude had risen by more than 30% from its early-August low, and also introduced the findings of a Reuters survey that August crude oil production by the Organization of the Petroleum Exporting Countries (OPEC) fell by 64만 barrels per day from the previous month, due to disruptions to Saudi Arabia’s exports and reduced shipments from Iran.
Treasury Yields and Apple’s Share Price Were Also Reflected
Oil prices were not the only factor behind Wednesday’s decline. 자유재경 reported that the yield on the U.S. 10-year Treasury note rose as high as 4.857% intraday and recorded 4.836% at the close, an increase of about 3 basis points. Rising long-term Treasury yields can increase corporate financing costs and the valuation burden on stocks, making them a source of pressure on the stock market.
The decline in Apple’s share price was also included in that day’s market reports. 자유재경 reported that Apple weakened intraday after announcing new products and that its shares closed at 315.34 dollars, down 0.88 dollars from the previous day. Because the Dow Jones is an index reflecting the share prices of several large companies, the entire index cannot be explained by the movement of a single company. Reports said that, over these two days, oil prices, interest rates, and the share prices of individual large companies simultaneously affected market sentiment.
References
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