US stocks fell on Tuesday, resuming their downward trajectory after last week’s rally, as a promise by European Union leaders to limit oil purchases from Russia boosted crude oil prices.
The S&P 500 fell about 0.6% in morning trading, a day after US markets closed on Remembrance Day. The reference index rose 0.6% for the month to Friday, putting it on a steady path after losing 8.8% in April. The Dow Jones Industrial Average was down 0.7%, while the Nasdaq Composite Index was down 0.6%.
Crude oil prices have risen after EU leaders said for the first time that they would impose an oil embargo on Russia over its invasion of Ukraine. The embargo will include an exemption for oil supplied by Russia through pipelines, which account for a third of Russia’s oil purchases from the EU.
Brent oil futures, the global benchmark, rose 1.4 percent to $ 119.23 a barrel. The West Texas Intermediate, the US mark, rose 2.7% to $ 118.22 a barrel, playing catch-up after the market closed on Monday.
Tuesday’s session will mark the end of another volatile trading month, during which stocks around the world rotated sharply as traders tried to assess the prospects for global economies. In the US, shares fell shortly after the beginning of the month and continued to fall amid numerous profits and economic data, which turned out to be worse than expected.
Throughout the month, earnings warnings from companies ranging from Snap to Target have heightened concerns about the continued impact of inflation and prompted investors to dump shares in several industries.
By mid-May, the S&P 500 seemed to be closing in a bear market, defined as a 20% drop or more from a recent peak. But a rally at the end of the month led to a rise in shares and helped the benchmark index reduce its losses. The S&P 500 fell about 14% from its highest level in January.
Professional and individual investors embarked on a rally in US markets last week, finding opportunities to grab stocks whose ratings have fallen. However, the problems that led to the decline in shares earlier this month have not yet subsided.
Many traders continue to worry that the Federal Reserve’s plans to aggressively raise interest rates could drive the US economy into recession. Meanwhile, concerns about China’s economic slowdown and protracted supply chain disruptions due to the pandemic and war in Ukraine continue to weigh on investors’ minds.
“There’s a little bit of market uncertainty just about the pretty fast rally we’ve had,” said Brooks McDonald’s chief investment officer Edward Park, “and whether that can be sustained in a world where inflation is clearly still a factor.”
European Union leaders have taken a major step in the economic fight against Moscow over its invasion of Ukraine, agreeing to block 90% of Russian oil imports by the end of the year. The embargo has met with resistance from countries heavily dependent on Russian oil, especially Hungary. Photo: Olivier Mathis / Associated Press
New survey data released on Tuesday showed that consumer confidence in the United States fell slightly in May from previous months. President Biden is also expected to meet with Fed Chairman Jerome Powell at the White House on Tuesday.
Ten of the 11 sectors of the S&P 500 fell on Tuesday. The exception was energy, which rose amid rising oil prices. Marathon Oil and Diamondback Energy jumped more than 3%.
Shares of Unilever traded in the United States jumped 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 1.5% stake.
The energy sector of the S&P 500 is about to end in May with the largest increase among the 11 groups of the reference index, continuing the trend that is booming for most of 2022. But even some dropped technology stocks will end the month green , such as Netflix and Zoom Video Communications.
“When the S&P 500 is [close to entering] a bear market that has a great psychological impact on those seeking value, ”said Craig Erlam, senior market analyst at Oanda. “I think the question that has been asked many times is, ‘Are we seeing the bottom of the markets?’
In the bond market, the yield on 10-year treasury bonds rose to 2.862% from 2.748% on Friday. Bond yields and prices are moving in opposite directions.
Abroad, the Pan-Continental Stoxx Europe 600 fell 0.7%, putting it on track to break a four-session winning streak as eurozone inflation rose faster than expected. Consumer prices rose 8.1 percent year-on-year – the fastest past since recordings began in 1997 – after rising 7.4 percent in April. The Inflation Report is likely to take into account the forthcoming decisions of the European Central Bank on interest rates. Earlier this month, ECB President Christine Lagarde said the central bank could raise its key interest rate in July for the first time in 11 years.
Traders worked on the floor of the New York Stock Exchange on Friday.
Photo: Courtney Crow / Zuma Press
In Asia, the Shanghai Composite Index rose 1.2 percent after the city’s government said the two-month blockade would be lifted on Wednesday. The shutdown, designed to limit the transmission of Covid-19, has slowed China’s economy and contributed to inflationary pressures elsewhere in the world by sticking supply chains together.
Hong Kong’s Hang Seng rose 1.4%. Japan’s Nikkei 225 down 0.3%
Write to Caitlin McCabe at caitlin.mccabe@wsj.com and to Joe Wallace at joe.wallace@wsj.com
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