U.S. stocks ended slightly higher while crude oil prices plunged nearly 6% at settlement after Saudi Arabia said it was on track to restore much of the oil production lost during a weekend attack on key facilities in the country’s oil infrastructure.
Here were the main moves in the market by the end of regular equity trading:
S&P 500 (^GSPC) +0.26%, or 7.74 points
Dow (^DJI): +0.13%, or 33.98 points
Nasdaq (^IXIC): +0.4%, or 32.47 points
U.S. crude oil prices (CL=F): -6.07% to $59.08 per barrel
10-year Treasury yield (^TNX): -3.6 bps to 1.807%
Gold (GC=F): -0.11% to $1,509.80 per ounce
Saudi energy minister Prince Abdulaziz bin Salman said in a press conference Tuesday that oil production capabilities had been restored and oil output would recover to normal levels by the end of September. This follows a slew of disparate estimates on when the 5.7 million barrels per day of disrupted output would come back online. Reports of attacks on key production centers in Saudi Arabia had previously pushed oil prices to post their biggest intraday price gain on record on Monday.
Meanwhile, analysts have debated whether the weekend’s oil shock would give more or less room for the Federal Reserve to ease monetary policy further, with central bank officials set to kick off the first of two days of policy-setting deliberations Tuesday.
Market participants largely expect central bankers will deliver a second 25 basis point cut to benchmark interest rates at the conclusion of the September meetings on Wednesday. However, the probability investors have priced in for this outcome has trended lower in recent days, according to CME Group data.
Higher oil prices put pressure on inflation overall, which has already shown signs of edging higher based on the most recent producer price and consumer price indices, Beth Ann Bovino, chief U.S. economist for S&P Global Ratings, said in a note.
“While the push-through of inflation from oil prices to core prices is small, the jump in overall prices, in combination with signs that core inflation is already heating up, may make it more difficult for the Fed to cut rates further,” Bovino said. “They had a cushion to fall back on with lower inflation.”
Others, however, argued that the fact that the circumstances generating the oil price rise – namely, heightened and now ongoing geopolitical tensions and uncertainty – creates, on net, a case for the Fed to cut rates further.
“As with any supply side shock, including the ongoing tariffs the Fed is wrestling with, higher oil prices create a tension in the Fed’s dual mandate,” Matthew Luzzetti, Deutsche Bank chief U.S. economist, wrote in a note, referring to the Fed’s mandate to promote both maximum employment and stable prices.
“Higher oil prices should, at least at the margin, exert a net drag on growth while at the same time lifting inflation and inflation expectations,” he said. “With the Fed worried about too-low inflation and inflation expectations and downside risks to the growth outlook, on balance these effects should reinforce the Fed’s already dovish bias.”
Meanwhile, government data Tuesday showed the U.S. manufacturing and industrial production rebounded in August, helping stave off some concerns of further deterioration in the sector and pointing to resilience in even the more vulnerable patches of the domestic economy. Industrial production rose 0.6% during the month, versus a 0.2% gain expected. July’s print was upwardly revised to show a reading of -0.1%, from -0.2% previously.
STOCKS: WeWork delays IPO, major Kraft Heinz investor sells more of its stake
The We Company, the parent-company of the shared-space leasing firm WeWork, has delayed plans to go public after struggling to drum up sufficient investor support.
The company issued a statement Tuesday saying that its initial public offering (IPO) would “be completed by the end of the year.”
Prior to the company announcement, recent reports had suggested WeWork was set to push ahead with an IPO as soon as this month, even after one of its biggest investors SoftBank lobbied the company to put off its go-public plans. WeWork was reportedly set to hit the public markets at a valuation of as low as $10 billion, according to Reuters, after earlier this year being valued at $47 billion following a private funding round from SoftBank.
Other IPOs are full-speed ahead. Anheuser-Busch InBEV (BUD) said Tuesday it would launch a second attempt to list its Asian business on the Hong Kong Stock Exchange. The IPO of the business, Budweiser Brewing Company APAC Limited, will comprise selling about 1.26 billion shares at between HK$27 and HK$30 (or $3.45 to $3.83) each and raising up to $4.8 billion, without the exercise of an upsize option or over-allotment option.
This comes after Belgium-based AB InBev in July shelved what was expected to be a $9.8 billion flotation, after investors balked at the high valuation for the business. In the months since, AB InBev sold off its Australian operations to Japan’s Asahi Group for more than $11 billion, helping to alleviate some of the business’s debt burden.
Separately, shares of Kraft Heinz (KHC) fell about 4% around market open after its second-largest shareholder, private equity firm 3G Capital Partners, disclosed it had sold 25.1 million shares.
The sale brought 3G Capital’s ownership down about 9% to 245 million shares, but still gives the firm about 20% ownership in Kraft Heinz. In August, 3G Capital had disclosed it sold 20.6 million shares on Kraft Heinz.
This comes after Kraft Heinz suffered a series of setbacks at the start of the year, including writing down $15.4 billion on its Kraft and Oscar Mayer brands, slashing its dividend and announcing the receipt of a subpoena from the Securities and Exchange Commission over its accounting policies in 2018.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: