US stock market news: Dow Jones, S&P 500, Nasdaq Composite edge lower crude oil output cut fuels inflation fears

Wall Street's main indexes opened lower on Monday (April 3) after a surge in oil prices renewed worries of persistent inflationary pressures, bolstering bets that the Federal Reserve will deliver another interest rate hike at its next meeting.

Tesla Inc (TSLA.O) dropped 6.1 per cent after disclosing March-quarter deliveries rose just 4 per cent from the previous quarter, even after CEO Elon Musk slashed car prices in January to boost demand.

The S&P 500 energy sector index (.SPNY) surged 4.9 per cent after Saudi Arabia and other OPEC+ oil producers announced unexpected output cuts that could push oil prices toward $100 a barrel. Chevron Corp (CVX.N), Exxon Mobil Corp (XOM.N) and Occidental Petroleum Corp (OXY.N) all rallied more than 4 per cent.

However, the prospect of higher oil costs added to inflation worries on Wall Street just days after evidence of cooling prices raised expectations that the U.S. Federal Reserve might soon end its aggressive monetary tightening campaign.

"The decision to cut production is a headwind for inflation ... and that's why, on balance we're seeing a generally 'risk off' bias," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

The Dow was lifted in part by a 4.6 per cent rally in UnitedHealth Group Inc (UNH.N) on better-than-proposed Medicare Advantage rates for 2024.

Investors worried about inflation drew comfort from surveys by the Institute for Supply Management and S&P Global that reflected weakness in manufacturing activity in March.
Interest rate futures imply 56 per cent odds the Fed will raise rates by 25 basis points at its meeting in May, and 44 per cent odds it will keep interest rates unchanged, according to CME Group's Fedwatch tool.

The S&P 500 climbed 0.37 per cent to end the session at 4,124.49 points.

The Nasdaq declined 0.27 per cent to 12,189.45 points, while the Dow Jones Industrial Average rose 0.98 per cent to 33,601.15 points.

Despite turbulence in the global banking sector, the S&P 500 jumped 7 per cent in the first quarter and the tech-heavy Nasdaq rallied 17 per cent.

First-quarter earnings season is around the corner, with big banks among the first to report in coming weeks and offer details about the sector's overall health after the March collapse of Silicon Valley Bank sparked a fears of a broader industry crisis.

Across the U.S. stock market (.AD.US), advancing stocks outnumbered falling ones by a 1.1-to-one ratio.

The S&P 500 posted 20 new highs and no new lows; the Nasdaq recorded 85 new highs and 121 new lows.

Volume on U.S. exchanges was relatively light, with 10.9 billion shares traded, compared with an average of 12.7 billion shares over the previous 20 sessions.

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