A jump in crude oil prices and further weakening in China sent stocks lower to kick off the holiday shortened week.
The S&P 500 lost 0.4% while the Nasdaq Composite was down 0.1%. Higher oil prices could be cause for concern, especially in an inflationary environment that seemed to be coming under control.
Yesterday, Russia and Saudi Arabia both announced oil production cuts that will last through the end of this year. Many analysts expected cuts to be extended for another month, so the actual length caught many off guard. Crude oil prices are now up 20% in the past three months and back to levels not seen since November of last year. Higher prices are being felt both at the pump, where consumers are paying an average of $3.80, but also by airlines who are seeing a jump in jet fuel prices.
The cut in oil production is partly being attributed to offsetting Iranian oil supplies. However, weakness out of China and slowing demand there continues to persist, which could also account for the cutbacks. Yesterday, China reported services output slowed to its lowest level in eight months. That comes on the heels of a report last week that manufacturing output contracted for a fifth consecutive month.
Elsewhere overseas, the EU announced a list of companies that face regulation under the newly enacted Digital Markets Act. The legislation is designed to curb the power of big tech companies, considered gatekeepers, while increasing competition for smaller companies. Companies meeting a certain threshold of users and market capitalization are subject to the legislation.
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