Oil prices rise significantly: interest rate fears send Wall Street plummeting

Rising yields and an oil price of over $100 per barrel at times are raising new fears of inflation among more and more investors. The yield on 30-year US government bonds has now climbed to its highest level in 24 years.

Fears of stubborn inflation and rising bond yields pushed Wall Street into the red on Wednesday. The Dow Jones index of standard stocks closed 0.7 percent lower at 51,180 points. The broader S&P 500 fell 0.2 percent to 7,801 points. The Nasdaq technology exchange index lost 0.2 percent to 27,539 points. This ended the recent winning streak of the three major US stock indices. The day before, the S&P 500 and Nasdaq had reached record highs. "The third quarter was actually supposed to be the weak quarter of the year, we should get a correction," said Thomas Martin, portfolio manager at GLOBALT. "That didn't happen, so we're happy and taking some money off the table."

Concerns about high government and corporate debt as well as a renewed rise in yields on long-term US government bonds were the trigger for investors' reluctance. The yield on 30-year securities has now reached a 24-year high. The price of North Sea Brent crude oil also briefly climbed above the $100 per barrel mark due to supply concerns as a result of the war in Iran. This fueled new fears of inflation and concerns about a prolonged cycle of interest rate hikes by central banks. However, the stock markets curbed their losses somewhat during trading. Previously, the International Energy Agency (IEA) announced an accelerated release of oil reserves with a focus on diesel, after which oil prices fell.

The minutes of the US Federal Reserve's September meeting published on Wednesday showed disagreement over the justification for the latest interest rate hike. At the time, the monetary authorities unanimously decided on the first interest rate increase since July 2023. Some participants saw the move as necessary to contain the impact of energy price shocks. Others, however, wanted to combat demand-driven inflation. Financial markets currently estimate the likelihood of a second straight rate hike at the October meeting at less than 20 percent, according to the CME's FedWatch tool. The value was 37.6 percent the previous week. The market expects a break in interest rates in October, even if further interest rate increases are generally expected, explained Martin.

The rise in bond yields also pushed interest rates on 30-year fixed-rate mortgages to a nearly three-year high. The indices for the real estate industry and house builders subsequently fell by 2.3 and 2.9 percent respectively. Chip values ​​also closed in the red. They had increased by more than 80 percent in the year to date.