Wall Street returns from the Memorial Day holiday.
Angela Weiss/AFP via Getty Images
Stocks were falling Tuesday, as oil prices gained after Europe placed more restrictions on Russian oil.
Dow Jones Industrial Average
futures have retreated 218 points, or 0.7%, while
futures have declined 0.7%.
futures were down 0.4%.
The price of oil jumped 3% to more than $118 a barrel, a level it hasn’t seen since early March, when it became clear that Russia was launching a full invasion of Ukraine. The move comes after the European Union said it would impose an oil embargo on Russia, which would include the vast majority of Russian oil imports by the end of the year. Pipeline exports of oil, specifically, will continue.
Higher oil prices could mean trouble for the stock market. If the price of oil stays elevated, it could bring inflation up slightly. High inflation has already been a problem, as companies have seen higher costs and falling profit margins, forcing them to lift prices, a threat to consumer demand. The latest inflation result in the U.S. showed that the rate of price increases is declining, and higher oil could get in the way of the progress.
The other issue is that the Federal Reserve is trying to combat inflation by lifting short-term interest rates, a move that is likely to dent economic growth. The Fed implied recently that it could slow down the pace of rate hikes as the economy slows, so markets do not want to see evidence that the pace of rate hikes will be on the faster side.
As if to reinforce this point, Fed Governor Christopher Waller said he…