The turbulent May for the markets ended almost exactly where the stock started, falling at the end of the session on Tuesday, when the S&P 500 index was less than a point higher than its level a month ago. It was the last turn of the month, with rising volatility and heated debates about inflation, the Federal Reserve’s plan to dampen it and the impact on the economy.
The S&P 500 fell 0.6 percent on Tuesday, bringing its monthly return to virtually zero. During May, the benchmark index rose more than eight percent after falling 20 percent from a record-breaking bear market.
Ten-year government bond yields climbed 12 basis points to 2.85 percent, just below the level at which the month began. West Texas Intermediate oil has changed little, so it was 10 percent higher during the month. And bitcoin remained above $ 31,000, down 17 percent in May.
The stock started the day lower due to fears that inflation is proving to be more persistent, which intensifies the debate about how quickly central banks will raise interest rates. Consumer prices in the eurozone jumped 8.1 percent in May to a record level a year earlier. Meanwhile, WTI oil has reduced profits from the European Union’s partial ban on Russian oil. The dollar has advanced.
Concerns about rising central bank rates, which could plunge the economy into recession, are keeping investors alert as rising food and energy costs are pushing consumers. May saw near-unprecedented stock volatility as the S&P 500 fell more than three percent three times, culminating in its longest series of weekly losses since 2001, rising sharply at the end of the month.
These movements come amid skepticism about whether the market is near the bottom and because volatility remains high. Swaps show that traders have almost the full price in two half-point rate increases in June and July, with even probability for the third such increase in September.
“Considering the likelihood that earnings estimates will have to fall sharply during the summer, it will encourage us to believe that the stock market will need to see lower lows before the end day. the decline is achieved, “said Matt Maley, chief market strategist at Miller Tabak + Co.
Federal Reserve Chairman Jerome Powell will meet with President Joe Biden at a rare meeting in the oval office on Tuesday to discuss inflation ahead of US figures later this week. The meeting follows Monday’s comments by Fed Governor Christopher Waller, who suggested that the Fed continue to raise rates in half-percent increments until inflation eased back to the central bank’s target.
“These are times when investors need a crystal ball,” wrote LPL financial strategists Jeff Buchbinder and Ryan Detrick. “We are fully aware of how difficult it is to see a bull case for stocks right now, and repeated testing of recent lows is certainly possible, but this week we will explain the bull case for the second half of the year. It starts with inflation. “
Deutsche Bank AG slipped between movements after the police and its asset management unit in Frankfurt raided. Unilever Plc jumped when activist investor Nelson Peltz joined its board. And Chinese stocks listed in the US – including Alibaba Group Holding Ltd. – the group’s monthly losses rose and erased as easing of blocking measures in large cities and better-than-expected economic data reassured investors.
Here are some key events this week to keep track of:
- The Federal Reserve will start cutting its balance sheet by $ 8.9 trillion on Wednesday
- The Fed published a Beige Book report on the regional economic situation on Wednesday
- New York Fed President John Williams and Fed President St. Louis James Bullard performed at separate events on Wednesday
- OPEC + virtual meeting on Wednesday
- Cleveland Fed President Loretta Mester discusses the economic outlook on Thursday
- Friday’s May report on US employment
- The Food and Agriculture Organization of the United Nations released its monthly food price index on Friday at a time of maximum concern about global stocks
Some of the main market movements:
- The S&P 500 at 0.6:05 New York time fell 0.6 percent
- The Nasdaq 100 fell 0.3 percent
- The Dow Jones Industrial Average fell 0.7 percent
- The MSCI World Index fell 0.6 percent
- The Bloomberg Dollar Spot index rose 0.4 percent
- The euro fell 0.4 percent to $ 1.0735
- The British pound fell 0.4 percent to $ 1.2604
- The Japanese yen fell 0.9 percent to 128.69 per dollar
- Yields on 10-year government bonds rose 12 basis points to 2.85 percent
- Germany’s 10-year yield rose seven basis points to 1.12 percent
- Britain’s 10-year yield rose 11 basis points to 2.10 percent
- West Texas Intermediate oil fell 0.1 percent to $ 114.94 a barrel
- Gold futures fell one percent to $ 1,839.10 an ounce
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