Home > Oil slips 12%, Dow closes 650 points higher as stocks rally- Market update

Oil slips 12%, Dow closes 650 points higher as stocks rally- Market update

Stocks rose sharply on Wednesday, rallying higher as commodity prices led by oil hit the brakes on recent upward action.

US stocks were headed for their best session in weeks, while in Europe, shares closed at near a two-year daily best. The gains came as the war in Ukraine intensified and only a day after the US banned imports of Russian oil.

Volatility will likely continue to dictate market movements, analysts say, with the geopolitical situation the main factor even as investors keep an eye on inflation and monetary policymakers.

Oil declines 12%

Oil prices have been characteristically high these past few weeks, with the Ukraine war and recent sanctions all contributing to the tailwinds that have pushed the "black gold."

Wednesday saw oil prices move sharply lower, crashing more than 12% to below $110 a barrel. On Monday, oil shot above $130 a barrel on potential supply shocks. It’s the retreat that has lent some buoyancy to stocks, with risk-on sentiment kicking in as investors reacted positively to events in the US.

As oil fell more than 12%, gold led other metals lower. Silver, copper and platinum all declined. Spot gold was 2.3% lower at $1,995.20 per ounce, while silver and copper had shed 3.4% and 2.4% respectively.

Stocks jump as Dow closes 650 points higher

After four straight red days, stocks roared into the green with the S&P 500 hitting its best session close since June 2020 with a +2.5% upside.

The Dow Jones Industrial Average also rose, closing just above 650 points, or about 2% higher after notching more than 800 points in intraday gains. The Nasdaq Composite rose 3.6% or 460 points to post its best daily return since November 2020.

In Europe, the Stoxx 600 index closed 4.7% higher while the FTSE 100 jumped 3.25%. In Germany, shares on the DAX index jumped nearly 8% as France’s CAC also rallied with over 7% during the session.

In individual stock, tech saw some decent gains as Meta Platforms, Microsoft, Amazon and Alphabet rose. Starbucks, which on Tuesday announced it would close its locations in Russia, also jumped, as did shares of carmaker Tesla.

Kathy Bostjancic, chief US Financial Market Economist at Oxford Economics told CNBC that the stock market will continue to “take its cues from changes in commodity prices,”

On this, she noted, oil would remain the main player and that traders should be ready for further volatility when oil eases off. However, with oil and other commodities likely to remain higher, there’s a potential for the equities to see new downside pressure.

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