S&P closes lower after last week’s rally with inflation leading

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 21, 2022. REUTERS/Brendan McDermid/File Photo

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May 31 (Reuters) – The S&P 500 closed lower on Tuesday after a three-session rally as volatile oil trading kept inflation soaring and investors reacted to hawkish comments from an official of the Federal Reserve.

After outperforming earlier in the session, the S&P (.SPNY) energy sector lost ground as oil prices reversed after a report that some OPEC members were exploring the idea to suspend Russia from an oil production deal, potentially paving the way for other producers. to pump a lot more crude.

Federal Reserve policy was also a priority for investors as US President Joe Biden and Fed Chairman Jerome Powell met on Tuesday to discuss inflation, which Biden said ahead of the meeting was his ” top priority”. Read more

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This was after Fed Governor Christopher Waller said on Monday that the US central bank should be prepared to raise rates by half a percentage point at every meeting from now until the inflation is firmly under control. Read more

“The market is trying to determine 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 longer-term equities, the impact of the OPEC and Russia report on the energy sector may have spooked the market a bit in broadly Tuesday.

“That’s the kind of thing that pisses off the market,” Janasiewicz said. “When we started, the sector that took us the highest was energy.”

According to preliminary data, the S&P 500 (.SPX) lost 24.52 points, or 0.59%, to end at 4,133.72 points, while the Nasdaq Composite (.IXIC) lost 48.62 points, or 0.40%, to 12,082.51. The Dow Jones Industrial Average (.DJI) fell 190.80 points, or 0.57%, to 33,006.27.

The three indices had rallied last week to snap a decades-long losing streak.

“There’s too much concern right now for the markets to make a sharp V-bottom,” said Carol Schleif, deputy chief investment officer at BMO Family Office, who sees stocks trading sideways for some time due to uncertainties, especially Russia-Ukraine. war, the global economy and inflation, and Fed policy.

“Energy prices are a part of that because they have a real impact on people’s willingness to spend. People really notice the higher prices at the grocery store,” she said.

Earlier in the day, data showed U.S. consumer confidence eased slightly in May amid persistently high inflation and rising rates, while a separate reading showed that growth in commodity prices homes in the United States hit record highs in March. Read more

Other key data due this week are monthly non-farm payrolls figures for labor market indices.

U.S.-listed shares of Yamana Gold Inc soared after South African miner Gold Fields Ltd (GFIJ.J) agreed to buy the Canadian miner in a 6.7 all-stock deal billions of dollars. Read more

Dexcom Inc (DXCM.O) jumped after the maker of glucose monitoring systems denied a report of merger talks with insulin pump maker Insulet Corp (PODD.O).

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Reporting by Sinéad Carew, Anisha Sircar, Devik Jain and Sruthi Shankar in Bengaluru; Editing by Marguerita Choy

Our standards: The Thomson Reuters Trust Principles.

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