Stocks fell sharply on Wednesday as investors retreated from mounting risks in the global economy. Earnings reports from big technology companies spooked investors, while the price of oil jumped to its highest level in months.
The Dow Jones Industrial Average fell more than 500 points, while the Nasdaq Composite dropped over 3%. Oil prices rose more than $2 a barrel, trading above $85.
The sell-off in stocks was driven by concerns about slowing economic growth in China, rising interest rates in the United States, and geopolitical tensions in Ukraine.
“Investors are getting spooked by the combination of economic headwinds and geopolitical risks,” said John Williams, chief investment officer at Williams Capital Management. “There’s a lot of uncertainty out there.”
The rise in oil prices was fueled by concerns about supply disruptions in Libya and Russia. Libya’s oil production has been cut by more than half due to political unrest, while Russia has threatened to reduce exports if Western countries impose further sanctions.
“The oil market is very tight right now,” said Robert McNally, president of Rapidan Energy Group. “There’s very little spare capacity to absorb any further disruptions.”
The combination of falling stocks and rising oil prices is likely to put further pressure on the global economy.
“This is a bad combination for the global economy,” said Williams. “Higher oil prices will eat into consumer spending, while falling stock prices will reduce wealth.”