The Dow Jones Industrial Average lets refiners price the war
The Dow Jones Industrial Average trades near 53,550, down close to 200 points and roughly 1,200 beneath the record printed on August 5, on the day the 60-day negotiating window that was meant to end the war over the Strait of Hormuz lapses with nothing agreed to replace it.
On the day the 60-day negotiating window meant to end the Strait of Hormuz war expired, the Dow Jones Industrial Average (DJIA) closed 1,200 points below its record high. Even though the highest print of the day was at the opening bell, the index has struggled to rise since hitting its peak. Iran has threatened to shift from a defensive to an offensive stance should diplomacy fail, with the Revolutionary Guard revealing plans for a US ground operation.
Despite the escalation threats, crude oil prices have risen, with WTI nearing $83.00 and Brent above $88.00. Three major American refiners, Valero, Marathon Petroleum, and Phillips 66, have all reached record levels, fueled by near-$100 a barrel diesel margins. The market perceives the current situation as more than a mere energy issue, as diesel prices impact a wide range of goods and services.
The August Empire State manufacturing survey showed a strong reading, suggesting that manufacturers are absorbing input costs without being able to pass them on to consumers. This is leading to increased inflation expectations and driving up futures prices. Expectations of a Fed rate hike have risen, with September hike odds increasing from near 50% to about one-third.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
