Saudi Arabia and other OPEC+ oil producers announced further oil output cuts of around 1.16 million barrels per day, threatening an immediate rise in prices.
This comes just days after a slowdown in US price data boosted market optimism.
Oil prices jumped 5.4% on Monday, propelling over 3% gains in energy firms such as Exxon Mobil Corp and Chevron Corp in premarket trade.
“It can be expected to have an upwards impact on headline and core CPI … which potentially means a higher terminal rate for the Fed and rates remaining at an elevated level for longer than hitherto,” Stuart Cole, head macro economist at Equiti Capital, said.
An uptick in US Treasury yields pushed major technology stocks and other growth shares such as Apple Inc AAPL.O, Amazon.com Inc, Microsoft Corp, and Alphabet Inc, down between 0.6% and 0.9%.
Traders’ bets of a 25-basis point rate hike in May stood at 58.7%, with odds of a pause at 41.3%, according to CME Group’s Fedwatch tool.
Among other major stocks, Tesla Inc dropped 2% after missing first-quarter deliveries estimates as a bleak economic outlook and rising competition weighed on the electric-vehicle maker’s sales.
At 5:09 a.m. ET, Dow e-minis were up 119 points, or 0.36%, S&P 500 e-minis were down 4 points, or 0.10%, and Nasdaq 100 e-minis were down 84.5 points, or 0.64%.
In the first quarter, that was marked by shockwaves from the collapse of two regional US banks, signs of trouble in some European banks and a repricing in interest rate expectations from the Fed, the S&P 500 jumped 7%, bouncing back from a near 20% drop in 2022. The Nasdaq recorded its strongest first-quarter jump of 17% since 2020.
Investors will closely monitor S&P Global and ISM manufacturing PMI data for March later in the day and much-awaited jobs reports this week.
Remarks by Federal Reserve Board Governor Lisa Cook on economic outlook and monetary policy are also expected later on Monday.
(Reporting by Ankika Biswas in Bengaluru; Additional reporting by Anjur Banerjee; Editing by Shounak Dasgupta)
This article originally appeared on reuters.com