Stocks on Wall Street closed lower on Friday, 23 October, as a sharp rise in oil prices added to worries about inflation and the cost of living around the world.
A difficult Friday on Wall Street
The S&P 500 — a broad index that tracks 500 large American companies and is often used as a health check for the US stock market — fell 0.5 percent to 7,623.68. It was the index’s second weekly loss in a row. The Dow Jones Industrial Average, which tracks 30 big companies, fell 1.2 percent, or about 653 points, to 52,215.16. The Nasdaq Composite, which is heavily weighted towards technology companies, slipped 0.2 percent to 25,955.34.
Nearly three out of every four stocks in the S&P 500 fell on the day, showing that the selling was broad and not limited to one sector. Energy shares were the exception: the S&P 500 energy sector rose 2.5 percent to a record, because higher oil prices help oil producers. Some technology shares also rose, with Micron up 2.5 percent, Intel up 1.7 percent, Microsoft up 0.7 percent and Advanced Micro Devices up 1.7 percent.
Why oil is driving the worry
Brent crude — the international benchmark price for oil, used as a reference price around the world — rose 3.1 percent to settle at $116.72 a barrel on Friday, its highest close since late April and up from below $97 at the start of October. US crude, known as West Texas Intermediate, rose 3.8 percent to $103.27 a barrel.
The rise reflects fears that supplies from the Middle East could be disrupted further, after attacks on Saudi energy sites and continued threats to shipping. When oil becomes dearer, transport and manufacturing also become dearer, and that can push up prices for ordinary households. In the bond market, the yield on the 10-year US Treasury note — the interest rate the US government pays to borrow for ten years, and a benchmark for borrowing costs worldwide — rose to 4.99 percent.
What comes next
Investors are now looking ahead to two big events in the coming week. The US Federal Reserve — America’s central bank, which sets interest rates for the world’s largest economy — holds its policy meeting with a decision due on 28 October. Its decision will signal how worried it is about inflation, which is the general rise in prices over time.
Big technology companies including Alphabet, Microsoft and Amazon are also due to report their earnings, which will show whether their profits are keeping pace with the heavy spending on artificial intelligence infrastructure.
What it means for Pakistan
For Pakistani readers, the link is direct. Pakistan imports most of its oil, so dearer crude raises the import bill and, with a lag, pressure on petrol and diesel prices at home — prices that have already risen sharply since July. It also complicates the State Bank of Pakistan’s interest rate decision due on Monday, 26 October, when the policy rate stands at 11.5 percent. A world where oil stays dear and global borrowing costs stay high leaves less room for comfort on either inflation or the rupee. This is a week to watch events, not to rush decisions.
Sources: Associated Press, Reuters. Written in our own words for information only — not investment advice.