Oil prices edged higher and global stock markets cooled on Tuesday after the Consumer Price Index showed that U.S. inflation in April rose at the fastest rate since May 2023, as sharp increases in energy costs caused by the U.S.-Israeli war with Iran made life more expensive for consumers.
Peace talks between the United States and Iran remained shaky. President Trump was scheduled on Tuesday to depart for Beijing to meet with China’s leader, Xi Jinping, in a summit that could help shape the future of the conflict. Mr. Trump said on Monday that the cease-fire was “on massive life support” after rejecting the latest Iranian offer to end the war and reopen the Strait of Hormuz, the vital waterway through which nearly a fifth of the world’s crude oil is usually carried on cargo ships.
Oil prices climb again.
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The price of Brent crude, the global benchmark for oil, rose more than 3 percent on Tuesday, climbing above $107 a barrel.
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West Texas Intermediate crude, the U.S. benchmark, rose over 3 percent, trading above $101 a barrel.
Stocks tumble on shaky cease-fire.
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The S&P 500 fell about 0.4 percent when trading began on Tuesday; the index had edged higher the day before.
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Stocks in Europe slid. The Stoxx 600, a broad European index, slipped a little less than 1 percent. In Britain, where Keir Starmer is fighting to save his premiership, the FTSE 100 edged lower.
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In South Korea, the benchmark Kospi index, which has been setting record highs thanks to excitement over artificial intelligence, shed more than 2 percent after talk of a tax on A.I. profits.
Gas prices dip.
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Gas prices fell two cents on Tuesday, to a national average of $4.50 for a gallon of regular, according to the AAA motor club. Despite the decline, gas prices are up 51 percent since the conflict began.
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Gas prices don’t move in lock step with changes in crude oil prices, usually trailing increases or drops by a few days.
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The average price of diesel held steady at $5.64 on Tuesday, up 50 percent since the start of the war.
What they are saying: Inflation is a “key focus.”
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Fading hopes for a peace deal have kept oil prices elevated and reinforced inflation concerns, pushing the yield on U.S. Treasury bonds higher, Bob Savage, the head of markets macro strategy at BNY, wrote in a note. “Inflation will be the key focus for the U.S. markets this morning,” he said.
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The Consumer Price Index rose 3.8 percent in April from a year earlier, driven largely by energy prices. Stripping out the volatile food and energy components, the inflation index rose at a 2.8 percent annual pace.
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