US equities fell on Tuesday and resumed their downward trajectory after last week’s rebound, while the promise of EU leaders to curb oil purchases in Russia pushed up crude oil prices .
The S&P 500 fell about 0.6% in the morning, a day after U.S. markets closed for Memorial Day. The benchmark index had risen 0.6% during the month to Friday, putting it on track to remain stable after the 8.8% loss in April. The Dow Jones Industrial Average fell 0.7%, while the Nasdaq Composite Index fell 0.6%.
Crude oil prices rose after EU leaders first said they would impose an oil embargo on Russia over its invasion of Ukraine. The embargo would include an exemption for oil delivered from Russia through pipelines, which account for a third of EU oil purchases in Russia.
Brent crude oil futures rose 1.4% to $ 119.23 a barrel. West Texas Intermediate, the U.S. benchmark, rose 2.7% to $ 118.22 a barrel, playing catch-up after the market closed on Monday.
Tuesday’s session will end another month of volatile trading, during which stocks around the world fluctuated sharply as traders tried to assess the outlook for global economies. In the U.S., equities fell shortly after the start of the month and continued to fall amid a lot of gains and economic data that were worse than expected.
Over the course of the month, earnings warnings from companies ranging from Snap to Target intensified concerns about the persistent impact of inflation and spurred investors to pour in stocks from various industries.
By mid-May, it looked like the S&P 500 was forced to close in a bearish market, defined as a 20% or higher drop from a recent high. But a rise at the end of the month pushed stocks higher and helped the benchmark lower its losses. The S&P 500 is down 14% from its January high.
Both professional investors and individuals participated in last week’s rebound in U.S. markets, finding opportunities to get stocks that have seen their valuations fall. However, the problems that led to a drop in stocks earlier this month have yet to be reduced.
Many traders remain concerned that the Federal Reserve’s plans to aggressively raise interest rates could cause the US economy to fall into a recession. Meanwhile, concerns about an economic slowdown in China and sustained supply chain disruptions due to the pandemic and war in Ukraine have continued to weigh on investors’ minds.
“There’s a bit of market uncertainty about the fairly rapid rebound we’ve had,” said Brooks Macdonald’s chief investment officer Edward Park, “and whether this can be maintained in a world where inflation is still clear a factor “.
EU leaders took a big step in the economic fight against Moscow over its invasion of Ukraine by agreeing to block 90% of Russian oil imports by the end of the year. The embargo faced opposition from countries heavily dependent on Russian crude, especially Hungary. Photo: Olivier Matthys / Associated Press
New data from the survey released on Tuesday showed that US consumer confidence declined slightly in May compared to previous months. President Biden is also expected to meet with Fed Chairman Jerome Powell on Tuesday at the White House.
Ten of the 11 S&P 500 sectors fell on Tuesday. The exception was energy, which rose due to rising oil prices. Marathon Oil and Diamondback Energy rose more than 3%.
U.S.-listed Unilever shares rose 8.5% after the consumer goods company said it would add activist investor Nelson Peltz to its board and revealed that its fund now has a stake in the United States. 1.5%.
The S&P 500 energy sector is on track to end May with the biggest gain among the 11 benchmark groups, extending a trend that has flourished for much of 2022. But even some tech stocks down they are expected to end the month in green. , such as Netflix and Zoom Video Communications.
“When is the S&P 500 [close to entering] a bear market, which has a big psychological impact on those looking for value, “said Craig Erlam, a senior market analyst at Oanda.
In the bond market, 10-year Treasury bond yields rose to 2.862% from 2.748% on Friday. Bond yields and prices are moving in opposite directions.
Outside, the Stoxx Europe 600 pan-continental fell 0.7%, setting off a four-session winning streak after eurozone inflation rose faster than expected. was expected. Consumer prices rose 8.1% year-on-year in May, the fastest time since records began in 1997, after rising at a rate of 7.4% in April. The inflation report is likely to take into account the European Central Bank’s forthcoming interest rate decisions. Earlier this month, ECB President Christine Lagarde indicated that the central bank could raise its key interest rate in July for the first time in 11 years.
Traders traded on the New York Stock Exchange on Friday.
Photo: Courtney Crow / Zuma Press
In Asia, Shanghai’s composite index rose 1.2% after the city government said on Wednesday that a two-month blockade would be lifted. The shutdown, designed to curb Covid-19 transmission, had slowed the Chinese economy and added to inflationary pressures elsewhere in the world by clogging supply chains.
Hong Kong’s Hang Seng rose 1.4%. Japan’s Nikkei 225 fell 0.3%
Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Joe Wallace to joe.wallace@wsj.com
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