Stocks open mixed, oil prices edge higher as OPEC meets
NEW YORK (AP) — Stocks are off to a mixed start on Wall Street Thursday as weakness in technology companies offsets gains elsewhere in the market. Microsoft weighed down the tech sector with a 3% loss after cutting its financial forecasts for the current quarter, citing unfavorable changes in exchange rates. The S&P 500 fell 0.2%. The Dow Jones Industrial Average and the Nasdaq were down by similar amounts, while small-company stocks rose. Crude oil prices were slightly higher as the OPEC oil cartel and allied countries including Russia considered changes in production levels as gas prices hit another record high in the U.S.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — Wall Street pointed toward gains in premarket trading and oil prices fell ahead of an OPEC meeting in which oil-producing countries will decide how much crude to produce with gasoline prices hitting record highs in the U.S. Thursday.
Futures for the S&P 500 and Dow Jones industrials gained 0.5% following mixed trading in global markets.
U.S. oil prices fell by more than $3 a barrel ahead of OPEC’s first meeting since Europe set sanctions on Russian crude for that country’s invasion of Ukraine.
The Financial Times reported Saudi Arabia has indicated to western allies it could raise production to cover any substantial fall in Russian production.
Supply bottlenecks would persist, Jeffrey Halley of Oanda said in a commentary, “but it would be a rare piece of good news for the global economy and the inflation fight.”
U.S. gasoline prices hit another record high Thursday, with the average price at the pump costing $4.71 per gallon, according to motoring club federation AAA. Higher oil and gas prices have contributed to the inflation that is plaguing the U.S. and Europe and sapping consumer purchasing power.
OPEC, whose de facto leader is Saudi Arabia, has thus far taken the stance that it can’t supply more oil to make up for production lost due to sanctions against Russia. That, along with a European Union agreement to end most oil imports from Russia over its invasion of Ukraine, has helped keep prices high. Gasoline and diesel prices have also been propped up by a lack of refining capacity to turn crude into motor fuel.
In Europe, France’s CAC 40 gained 1.0% in early trading, while Germany’s DAX added 0.8%. Markets were closed in Britain for the Platinum Jubilee marking Queen Elizabeth’s 70 years on the throne.
In China, strict COVID-19 restrictions are back in Hong Kong as infections rise, while they are gradually being lifted in Shanghai. China has stuck to a “zero-COVID” strategy that requires lockdowns, mass testing and isolation for those infected or who has been in contact with someone testing positive.
Japan’s benchmark Nikkei 225 lost 0.2% to finish at 27,413.88. Australia’s S&P/ASX 200 shed 0.8% to 7,175.90. South Korea’s Kospi slipped 1.0% to 2,658.99. Hong Kong’s Hang Seng dipped 1.0% to 21,082.13, while the Shanghai Composite reversed earlier losses, gaining 0.4% to 3,195.46.
Daily market swings have become routine amid worries that too-aggressive rate hikes by the U.S. Federal Reserve may force the American economy into a recession. Even if it can avoid choking off the economy, higher rates put downward pressure on stocks and other investments regardless. High inflation is meanwhile eating into corporate profits, while the war in Ukraine and business-slowing, anti-COVID-19 restrictions in China have also weighed on markets.
The Fed has signaled it may continue raising its key short-term interest rate by double the usual amount at upcoming meetings in June and July. Speculation built last week that the Fed may consider a pause at its September meeting, which helped stocks to rise. But such hopes diminished after Wednesday’s manufacturing report from the Institute for Supply Management.
It showed U.S. manufacturing growth accelerated last month, contrary to economists’ expectations for a slowdown. A separate report said that the number of job openings across the economy ticked a bit lower in April but remains much higher, at 11.4 million, than the number of unemployed people.
Wednesday marked the start of the Fed’s program to pare back some of the trillions of dollars of Treasurys and other bonds that it amassed through the pandemic. Such a move should put upward pressure on longer-term rates.
The 10-year Treasury yield rose to 2.92% from 2.84% just before the report’s release.
Benchmark U.S. crude lost $3.11 to $112.15 a barrel. Oil prices rose 0.5% to settle at $115.26 on Wednesday. Brent crude, the international standard, shed $3.09 to $113.20 a barrel.
In currency trading, the U.S. dollar slid to 129.63 Japanese yen from 130.15 yen. The euro rose to $1.0693 from $1.0649.