S&P 500 Just Had Its Biggest Drop in 16 Months

Stocks fell sharply on Wall Street Monday after another big leap for oil prices threatened to squeeze inflation’s grip on the global economy. The S&P 500 fell 3%, its biggest drop in 16 months, after a barrel of US crude surged to nearly $120 on the possibility that Washington could bar imports from Russia, the AP reports. The S&P 500 fell 122.78 points to 4,201.09. The Dow Jones Industrial Average fell 797.42 points, or 2.4%, to 32,817.38. The Nasdaq composite slid 482.48 points, or 3.6%, to 12,830.96. A barrel of US crude oil settled at $119.40 per barrel, up 3.2%, after earlier touching $130.50. Brent crude, the international standard, settled at $123.21 per barrel, up 4.3%, after earlier topping $139.

Oil prices have soared recently on worries that Russia’s invasion of Ukraine will upend already tight supplies. Russia is one of the world’s largest energy producers, and oil prices were already high before the attack because the global economy is demanding more fuel following its coronavirus-caused shutdown. House Speaker Nancy Pelosi said in a letter to her colleagues on Sunday that "the House is currently exploring strong legislation" to further isolate Russia because of its attack on Ukraine. That could include a ban on imports of Russian oil and energy products, she said.

Markets worldwide have swung wildly recently on worries about how high prices for oil, wheat and other commodities produced in the region will go because of Russia’s invasion, inflaming the world’s already high inflation. Some investors have seen the war in Ukraine as potentially pushing the Fed to go easier on rate increases. Investors love low rates because they tend to boost prices for stocks and all kinds of markets. But that may not necessarily be the case this time, Goldman Sachs economists wrote in a report. With prices for oil, wheat, and other commodities potentially rising even more, the threat is higher for a sustained, high inflation to settle on the economy. That could flip the Fed's traditional playbook.

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