US close: Stocks fall as oil prices reach 2023 highs

dl nyse new york stock exchange wall st street city finance dow jones nasdaq sp finance dollar dollars us usa united states of america 2 — New York Stock ExchangeSharecast photo / Josh White

Wall Street witnessed a dip in performance on Wednesday, as investors grappled with renewed inflationary anxieties, stemming from a noticeable uptick in bond yields and crude oil prices.

The Dow Jones Industrial Average saw a decline of 0.57%, ending the trading session at 34,443.19 points.

Similarly, the broader S&P 500 index fell by 0.7%, settling at 4,465.48 points, while the tech-heavy Nasdaq Composite faced the most significant hit amongst the major indices, closing 1.06% down at 13,872.47.

On the currency front, the dollar was last up 0.11% on sterling at 80.04p and ahead 0.09% against the euro at 93.3 euro cents.

It slid against the yen by 0.11%, however, changing hands at JPY 147.50.

“A quiet start to the week has left markets focusing on the risk of higher inflation in Q4, with strength in oil prices becoming more and more of a worry for traders,” said IG chief market analyst Chris Beauchamp.

“Last week’s hopes of no change in Fed policy have given way to worries that central banks will confront anew the risk of rising inflation.

“Today’s Fed Beige Book has taken on new importance, in case it shows that inflation worries are returning for businesses.”

US services sector faces slower growth; oil prices surge amid production cuts

On the economic front, activity within the US services sector experienced a more significant dip than previously expected last month.

According to S&P Global's latest findings, the services Purchasing Managers' Index (PMI) for August came in at 50.5, down from its July reading of 52.3.

The initial report for July had placed the PMI at 51.0.

S&P put the slowdown down to a combination of rising interest rates and mounting inflation which consequently impacted new business, resulting in a drag on output growth.

While the decrease in new orders was marginal, it marked the first dip seen in half a year, standing in stark contrast to the robust growth observed from April to June.

Meanwhile, the hiring pace within the sector was at its most sluggish in nearly 12 months.

In the energy realm, oil prices have peaked to their highest levels for 2023, on the heels of unexpected announcements from both Saudi Arabia and Russia regarding voluntary reductions in their oil production.

Tech and pharma stocks decline; Palisade Bio soars

In equities, key tech players experienced a downturn, as Apple recorded a 3.58% decline, Nvidia dropped by 3.05%, and electric car giant Tesla was down by 1.78%.

The pharmaceutical sector also grappled with pressures, particularly dragging the Nasdaq down.

Despite recent positive reports on the efficacy of its updated Covid vaccine against the latest variant, Moderna tumbled 10.2%.

AstraZeneca faced a setback of 0.95% after the FDA's decision to delay the approval of AstraZeneca's Ultomiris treatment.

The health agency requested additional information before proceeding with the authorization of the drug intended to treat adults diagnosed with neuromyelitis optica spectrum disorder.

Meanwhile, pharmaceutical stalwarts Biogen, Vertex Pharmaceuticals, Amgen, and Gilead Sciences also reported moderate losses, with declines ranging from 0.97% to 1.97%.

On the upside, Palisade Bio rocketed 108.79% after it announced a licensing agreement with Giiant Pharma.

The collaboration aimed to develop, produce, and bring to market Giiant's pro-drug platform, focusing on therapeutic solutions for inflammatory bowel disease.

Reporting by Josh White for Sharecast.com.

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