Wall Street closes lower as oil rallies

Wall Street closed lower on Friday, hit by a fresh surge in crude prices amid fears of an escalation in the Middle East, according to the outlet Banca y Negocios. The Nasdaq Composite fell 0.21%, the S&P 500 lost 0.52% and the Dow Jones Industrial Average dropped 1.23%.

Higher oil prices directly pressure production and transportation costs worldwide, reviving inflation fears in financial markets. More expensive crude raises energy costs for companies and consumers, narrowing corporate profit margins and weighing more heavily on traditional industrial stocks.

Brent crude, the international benchmark, traded above $116 a barrel, its highest level since April, according to information published by Banca y Negocios. This movement in energy markets quickly feeds through to government bond yields, raising borrowing costs.

Meanwhile, the yield on the 10-year US Treasury note stood near 5%, compared with 4.95% at Thursday's close. Higher government debt yields tend to make equities less attractive, encouraging investors to seek refuge in safer assets.

Archive, 2020 · Photo: Nefronus · CC0 · Wikimedia Commons