US stocks stumbled yesterday, snapping a two-day rally, as investors tracked soaring inflation, while oil prices rose despite the latest US petroleum release announcement by President Joe Biden.

The yield on the 10-year US Treasury note, a proxy for Federal Reserve interest rates, jumped above 4% following UK data that showed inflation soaring back above 10% last month.

“There’s nothing to suggest that inflation is going to move in the right direction,” said Tom Cahill of Ventura Wealth Management. 

A downcast Federal Reserve “Beige Book” report observed rising recession fears as households grapple with soaring costs and earlier Fed interest rate hikes slowing demand.

After climbing the last two days, major US indices retreated, with the S&P 500 losing 0.7%.

Bourses in Paris, London and Frankfurt also pulled back.

Market movements have been dominated in recent months by interest rate hikes by the US Federal Reserve and other central banks as they try to rein in surging inflation.

Foreign exchange traders were keeping tabs also on whether the dollar would reach 150 yen, which would be a fresh high for 32 years.

Japan’s currency is being hit hard as the country’s central bank holds off from hiking interest rates, in sharp contrast to its peers.

Traders were given an extra boost by news that Netflix gained more than two million subscribers in July-September. Shares of Netflix surged more than 13%.

In Europe, Nestle’s nominal sales surged in the first nine months of the year as the maker of Nespresso capsules, Purina pet food and Haagen-Dazs ice cream raised its prices in response to soaring inflation.

Nestle’s shares ended the day down 1.3%, however, amid concerns about the impact of higher prices on sales volumes.

On commodity markets, crude oil prices rose after US inventory data showed a surprise decline in petroleum reserves. 

The gains also came as Biden announced the release of a final 15 million barrels of an earlier promise to release 180 million barrels from the Strategic Petroleum Reserve.

However, he also urged the US oil industry to get more oil out of the ground, insisting this did not counter his presidency’s priority of pushing the United States into a clean energy future.

“We need to responsibly increase American oil production without delaying or deferring our transition to clean energy,” he said.

Key figures around 2100 GMT

New York - Dow: DOWN 0.3% at 30,423.81 (close)

New York - S&P 500: DOWN 0.7% at 3,695.16 (close)

New York - Nasdaq: DOWN 0.9% at 10,680.51 (close)

London - FTSE 100: DOWN 0.2% at 6,924.99 (close)

Frankfurt - DAX: DOWN 0.2% at 12,741.41 (close)

Paris - CAC 40: DOWN 0.4% at 6,040.72 (close)

EURO STOXX 50: UP 0.2% at 3,471.24 (close)

Tokyo - Nikkei 225: UP 0.4% at 27,257.38 (close)

Hong Kong - Hang Seng Index: DOWN 2.4% at 16,511.28 (close)

Shanghai - Composite: DOWN 1.2% at 3,044.38 (close)

Pound/dollar: DOWN at US$1.1219 from US$1.1320 on Tuesday

Dollar/yen: UP at ¥149.88 from ¥149.26

Euro/dollar: DOWN at US$0.9778 from US$0.9858 

Euro/pound: UP at 87.10 pence from 87.09 pence

Brent North Sea crude: UP 2.6% at US$92.41 per barrel

West Texas Intermediate: UP 3.3% at US$85.55 per barrel – AFP, October 20, 2022.