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Stocks jump most since June 2020 as oil prices fall sharply

NEW YORK (AP) — Stocks had their biggest jump since June 2020 Wednesday as a sharp drop in oil prices eased fears that inflation was about to get worse around the globe.

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Mar 9, 2022

By STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA AP Business Writers

NEW YORK (AP) — Stocks had their biggest jump since June 2020 Wednesday as a sharp drop in oil prices eased fears that inflation was about to get worse around the globe.

The S&P 500 rose 2.6%. The rally broke a four-day losing streak for stocks but wasn’t enough to erase their losses for the week.

The price of U.S. crude oil dropped 12%, the most since November, bringing relief after a sharp runup in crude prices since Russia invaded Ukraine. Big swings have been jerking markets around in recent weeks as investors try to guess how much damage the war will do to the global economy.

The chaotic movements are likely only to continue with uncertainty so high about the war in Ukraine and its ultimate economic fallout. The region is key to markets because it’s a major producer of oil, wheat and other commodities, whose prices have spiked on worries about disruptions to supplies.

Stocks once again moved in the opposite direction of oil prices, with inflation such a dominant worry. Analysts said bargain hunters may be scooping up stocks after concerns about a slowing economy coupled with high inflation triggered their steep recent slide. Many of those buyers appear to be smaller-pocketed, “retail” investors trading on their phones and laptops. And they’re often buying shares that big professional investors are selling.

Crude oil prices tumbled and the slide accelerated amid reports that the United Arab Emirates will urge fellow OPEC members to boost production and ease supply concerns. A barrel of U.S. crude oil dropped 12.1% to settle at $108.70. Brent crude, the international standard, fell 13.2% to settle at $111.14.

Last week saw record selling of U.S. stocks by hedge funds, strategist Jill Carey Hall wrote in a recent BofA Global Research report. Retail investors and institutional investors were net buyers.

The moves by retail investors may be a result of people worrying about missing out on any potential rebound. A “buy-the-dip” strategy, where drops in stocks were seen mainly as opportunities to buy low, was very successful following the 2020 crash caused by the coronavirus. The S&P 500 kept climbing from that plummet without a 10% drop until just recently.

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