A pledge between EU leaders to curb oil purchases from Russia pushed up crude prices, while US stock futures fell, with markets ruled by volatility during the last trading session of the month.
S&P 500 futures fell 0.3% on Tuesday, a day after US markets closed for Memorial Day. The benchmark index was up 0.6% for the month from Friday, on track to stabilize after April’s 8.8% loss. Contracts on the Dow Jones Industrial Average fell 0.5%, while contracts on the technology-focused Nasdaq-100 were up 0.1%.
Crude oil prices rose after EU leaders first called for oil sanctions on Russia over its invasion of Ukraine. The embargo would include exemptions for oil delivered from Russia via pipelines, an amount that makes up a third of the EU’s oil purchases from Russia.
Global benchmark Brent crude futures rose 1.5% to $119.41 a barrel. West Texas Intermediate, US, rose 3.1% to $118.63 a barrel after the market closed on Monday.
Tuesday’s session will cap another volatile trading month during which stocks around the world jumped wildly as traders tried to assess the outlook for global economies. In the US, stocks tumbled shortly after the month began and continued to fall amid worrying earnings results and worse-than-expected economic data. Profit warnings from companies ranging from Snap to Target intensified concern among investors that inflation is weighing more on corporations than once anticipated.
By mid-May, it looked like the S&P 500 was bound to close out in a bear market, defined as a decline of 20% or more from recent highs. But a month-end rally rallied in stocks and helped the benchmark index cover its losses. Based on Friday’s close, the S&P 500 is now down 13% from its January highs.
Professional and individual investors alike have joined the recent rally in US markets, looking for opportunities to scoop up stocks that have seen their valuations plummet. However, many investors are aware that issues that plunged the stock earlier this month are yet to be eased.
Many traders are concerned that the Federal Reserve’s plan to aggressively raise interest rates could propel the US economy into recession. Meanwhile, worries about the economic slowdown in China and the continued disruption in supply-chain due to the pandemic and the war in Ukraine remain on investors’ minds.
“There’s a bit of uncertainty in the market about the bullish rally we’ve had,” said Edward Park, chief investment officer at Brooks McDonald, “and whether it can sustain in a world where inflation is clearly still a factor.” Is.
Later Tuesday, investors will analyze the latest data on consumer confidence to get a better understanding of Americans’ economic outlook. President Biden is also expected to meet with Fed Chairman Jerome Powell at the White House on Tuesday.
In premarket trading in New York, retailers, travel stocks and home builders were among those who traded less. Energy companies, by contrast, are detecting a rally in oil prices. Exxon Mobil, Diamondback Energy and Halliburton each rose 1% or more.
U.S.-traded shares of Unilever rose after the consumer-goods company said it would add active investor Nelson Peltz to its board and disclosed that it now holds a 1.5% stake in the fund.
The yield on the 10-year Treasury note in the bond market rose to 2.817% from Friday’s 2.748%. Yields have fallen from their 2022 high of 3.1% in recent weeks as investors lowered expectations about how far the Federal Reserve will raise interest rates to curb inflation. Bond yields and prices move in opposite directions.
There was a mixed trend in the international stock markets. Stokes Europe 600 fell 0.4% to snap a four-season winning streak after eurozone inflation rose faster than expected and reached a record high. Consumer prices rose 8.1% in May after climbing by 7.4% in April. The inflation report will likely be a factor in the European Central Bank’s upcoming interest rate decisions. Earlier this month, ECB President Christine Lagarde indicated that the central bank may raise its key interest rate in July for the first time in 11 years.
The decline was widespread during the European session. Banks, travel stocks and retailers fell. In contrast, Tuesday’s gains included Norway’s Equinor, Spain’s Repsol and London-listed shale-energy companies, which stand to benefit from a rise in oil prices.
In Asia, the Shanghai Composite Index rose 1.2% on Wednesday after the city government lifted a two-month lockdown. Shutdowns designed to limit Covid-19 transmission had slowed the Chinese economy and added to inflationary pressures elsewhere in the world by gumming up supply chains. Hong Kong’s Hang Seng was up 1.4%. Japan’s Nikkei 225 fell 0.3%