Energy Markets Face Uncertainty Amid Prolonged Conflict

Vice Chairman of S&P Global and Pulitzer Prize-winning author Daniel Yergin discusses the escalating conflict in the Middle East and its potential long-term impact on global energy markets with Bloomberg’s David Gura and Christina Ruffini on “Bloomberg This Weekend.” Airlines are among the biggest decliners in the US stock market as travel, auto, retail and restaurant shares slide during Monday’s spike in oil. Higher energy prices have translated into pricier jet fuel while also threatening to hit consumer demand.

Brent crude futures soar as much as 29% to $119.50 a barrel before paring gains

The S&P 500 Index is down as much as 1.5% in early trading

The S&P 1500 Consumer Discretionary Index (S15COND) falls as much as 3%

Travel

Among airlines, United -6.4%, American -5.6%, Delta -4.5%

Cruise lines, which also consume large amounts of fuel: Carnival -7.3%, Royal Caribbean -6.4%, Norwegian -5.9%

Hotels, which will take a hit if the conflict makes consumers too nervous to travel or if higher energy prices squeeze their pocketbooks: Marriott -2.7%, Hilton -2.4%

“We assume the airlines are able to recapture a portion of the spike in fuel prices, but it’s hard to envision margin expansion this year barring a rapid decline in energy prices,” TD Cowen analyst Tom Fitzgerald wrote

An index of airline stocks fell into a bear market Friday on fears that a spike in jet fuel prices will squeeze profits Retail, Apparel and Restaurants

Among movers: RH -8.6%, Bloomin’ Brands -7.8%, Macy’s -5.7%, Under Armour -5%, Gap -4.7%, Lululemon -3.9%, Nike -2.6%

Not only do distribution and transportation expenses rise for retailers, but the higher pump prices also take money from consumers’ discretionary spending as well, and are “especially troublesome for lower and fixed-income consumers,” according to John Zolidis, president and founder of Quo Vadis Capital

Autos and Ride-Sharing

US auto stocks slide: Stellantis -3.4%, GM -2.8%, Ford -2.6%

Bloomberg Intelligence analyst Steve Man said Ford is the most exposed of the main US automakers if drivers eschew pickup trucks due to higher oil prices

Ride-hailing and delivery names are exposed to oil shocks given fuel is largest variable cost for drivers, according to Bloomberg Intelligence’s Mandeep Singh

“Any attempt to offset these costs by passing them through to consumers is likely to reduce demand and usage frequency by users, which have been a key driver of subscriptions and ad revenue,” he wrote

Uber -3.7%, Lyft -0.6%, DoorDash -4.2%, Grab Holdings -3.5%, Amazon -2.1%

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