Wall Street dips as $100 oil, inflation worries weigh on investors

Wall Street dipped as oil prices surged past $100 a barrel for the first time since July, with the Dow Jones Industrial Average ending down 0.77% and the S&P 500 dropping 0.48%. The Nasdaq Composite shed 0.64%, while MSCI's global stock gauge fell 0.52%. Oil prices rose 3.4% on the day, with Brent crude settling at $101.21 a barrel and US West Texas Intermediate crude up $3.02, or 3.25%, at $96.05 a barrel. This move was attributed to ongoing Gulf tensions and inflation fears, with Iran attacking 10 ships near the Strait of Hormuz after the US sank five Iranian oil tankers. The Treasury Department announced a $6 billion buyback of 10-to-20-year government bonds, causing yields on benchmark U.S. 10-year notes to rise 3.66 basis points to 4.841%. Analysts such as Lukman Otunuga, head of market research at FXTM, warned that a prolonged oil shock could keep price pressures elevated and complicate the path for central banks. The euro edged higher ahead of the European Central Bank's policy decision on Thursday, with expectations of a rate hike due to inflationary pressures from the Iran war. The yen strengthened toward a nearly seven-month high touched against the dollar on Tuesday as traders exited short positions in the Japanese currency. The dollar index rose 0.05% to 98.83, with policymakers looking for evidence that inflation pressures are continuing to cool. The latest Reuters survey of economists found about 70% expect the Federal Reserve to keep rates steady at its policy meeting next week, below the 90% expectation of steady rates in August. Gold was up 0.98% to around $4,396 an ounce.