The Dow was down nearly 450 points in the morning session with the other indexes following a similar red pattern, but recovering throughout the day, even breaking even around 2 pm, then falling again to close 222 down.  What initially triggered today’s chaos was a statement from Fed Governor Waller yesterday that there should be a rate hike every month for the foreseeable future, thereby once again inflating the whole “uncertainty” balloon that everyone thought was under control last week. So once again “the market’s trying to figure out the endgame for the Fed.” Also rising energy prices have really impacted consumer spending, particularly with the higher grocery prices. With the holiday over, volume has now risen above recent averages at 15.5 billion. 

Tue  May 31, 2022  4:22 PM

S&P closes lower after last week's rally with inflation in focus

By Sinéad Carew and Anisha Sircar

DJ: 33,212.96  +575.77       NAS: 12,131.13  +390.48        S&P: 4,158.24  +100.40   5/27

DJ: 32,990.12  -222.84        NAS: 12,081.39  -49.74           S&P: 4,132.15  -26.09      5/31

May 31 (Reuters) - The S&P 500 closed lower on Tuesday after a three-session rally as volatile oil trading kept soaring inflation in focus and investors reacted to hawkish comments from a Federal Reserve official.  After outperforming earlier in the session, the S&P's energy sector (.SPNY) lost ground as oil prices reversed course after a report that some OPEC members were exploring the idea of suspending Russia from an oil-production deal, potentially paving the way for other producers to pump significantly more crude.  Federal Reserve policy was also top of mind for investors as U.S. President Joe Biden and Fed Chair Jerome Powell met on Tuesday to discuss inflation, which Biden said ahead of the meeting was his "top priority." read more  This was after Fed Governor Christopher Waller said on Monday the U.S. central bank should be prepared to raise rates by a half percentage point at every meeting from now on until inflation is decisively curbed. read more

"The market's trying to figure out the endgame for the Fed," said Jack Janasiewicz, portfolio manager at Natixis Investment Management solutions.  And while lower commodity prices would be good news for equities in the longer term, the impact of the report about OPEC and Russia on the energy sector may have spooked the broader market a little on Tuesday.  "That's the sort of thing that has the market on edge," said Janasiewicz. "When we started out, the sector leading us higher was energy."

The Dow Jones Industrial Average (.DJI) fell 222.84 points, or 0.67%, to 32,990.12, the S&P 500 (.SPX) lost 26.09 points, or 0.63%, to 4,132.15 and the Nasdaq Composite (.IXIC) dropped 49.74 points, or 0.41%, to 12,081.39.  With Tuesday's decline, the S&P and the Dow were essentially unchanged for May. The Nasdaq showed a monthly decline of 2%.

"There're too many concerns at the moment for markets to do a sharp V-bottom," said Carol Schleif, deputy chief investment officer at BMO Family Office, who sees equities trading sideways for some time due to uncertainties including the Russia-Ukraine war, the global economy and inflation, as well as Fed policy.  "A piece of it is energy prices because at the margin those really impact people's propensity to spend. People are really noticing the higher prices at the grocery store," she said.

Earlier in the day, data showed U.S. consumer confidence eased modestly in May amid persistently high inflation and rising rates, while a separate reading showed U.S. home price growth unexpectedly heated up to record levels in March. read more  Other key data due this week is the monthly non-farm payrolls numbers for cues on the labor market. 

 

U.S.-listed shares of Yamana Gold Inc climbed after South African miner Gold Fields Ltd (GFIJ.J), agreed to buy the Canadian miner in a $6.7 billion all-share deal. read more  Dexcom Inc  (DXCM.O)  jumped after the glucose monitoring systems maker denied a report on merger talks with insulin pump maker Insulet Corp (PODD.O). 

 

Declining issues outnumbered advancing ones on the NYSE by a 1.82-to-1 ratio; on Nasdaq, a 1.44-to-1 ratio favored decliners.  The S&P 500 posted four new 52-week highs and 29 new lows; the Nasdaq Composite recorded 53 new highs and 58 new lows.

On U.S. exchanges 15.52 billion shares changed hands on Tuesday, compared with the 20-day moving average of 13.25 billion.