Wall Street down as airstrikes start in Yemen

Markets worry about rising tensions in the Middle East and its repercussions on oil prices.

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By :  ,  Financial Analyst

Wall Street opened lower today (March 26th) after the announcement of airstrikes by Saudi Arabia and its allies on Yemen. The action sparked worries about rising tensions in the Middle East and its repercussions on oil prices. US crude was $1.07 (£0.72) higher at $50.28 a barrel.

The Dow Jones fell 75.01 points to 17,643.53 after the opening bell, while the S&P 500 dropped 7.34 points to 2,053.71. The Nasdaq was 43.53 points lower at 4,832.99.

"Obviously the situation in Yemen is being used as the excuse for this pullback, which is a continuation of yesterday," Peter Cardillo, chief market economist at Rockwell Global Capital, told Reuters.

"Whether or not this is the beginning of a correction that could take us down by eight or ten per cent I’m not sure, but certainly the ingredients for one are in the making," he added.

Upbeat employment figures

US stocks had dropped yesterday after a slump in technology, and the publication of a string of weak economic data on manufacturing, home building, consumer spending and trade.

However, initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 282,000, the lowest level since mid-February and below the 290,000 estimate.

Investors are also focusing on interest rates, after US consumer prices rebounded last month as petrol prices rose for the first time since June last year. Many analysts speculate that interest rates could be raised early this summer.

The Consumer Price Index (CPI) rose by 0.2 per cent in February, but remained unchanged from a year earlier, the Department of Labor said. The monthly rise follows three consecutive months of declines, including a 0.7 per cent drop in January, partly due to a drop in oil prices. 

Last week, the Fed modified its stance on interest rates, dropping its "patient" language from the policy statement, and trimmed its growth and inflation forecasts.

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