Market Snapshot: S&P 500 sheds 1.1% as oil tops $120 a barrel and stocks slump

U.S. stocks were mostly lower Wednesday, as investors awaited inflation data due at the end of the week and oil prices jumped after data showed a fall in gasoline inventories.

What are major indexes doing?

The Dow Jones Industrial Average 

lost 144 points, or 0.5% to 33,028

The S&P 500 

declined 25 points, or 0.6%, to 4,135.

The Nasdaq Composite 

was off 48 points, or 0.4%, at 12,127.

On Tuesday, major indexes rose solidly, posting back-to-back gains.

What’s driving markets?

Trading volume remains low as investors look ahead to Friday’s consumer price data for May, while a follow-up to Tuesday’s gains could be a tough order for U.S. stocks, with oil prices rising.

“What’s the focus right now is people are not willing to really put on much risk ahead of CPI on Friday, which is really the only number that matters currently,” Scott Ladner, chief executive at Infrastructure Capital Management said in a phone interview. “What we’ve seen really all week long is extraordinarily little volumes in global equity markets.”

“What we’re really going to be looking at is what does the month over month figure look like for CPI, on the core measurements? And does that look like it is starting to come down? In other words, have we gotten peak inflation is the question everybody’s really wants answered on Friday,” Ladner said.

Read: This hedge-fund manager called inflation early. He now says consumer prices will finish 2022 at a level that `screams failure by the Fed’

Data showed inventories of U.S. merchant wholesalers rose 2.2% in April on month, easing from the revised 2.7% increase in March, according to the Commerce Department.

The Organization for Economic Cooperation and Development cut its global economic growth forecast for this year to 3% from 4.5%, and predicted growth would slow to 2.8% in 2023, as it cited “a new set of adverse shocks” from Russia’s invasion of Ukraine and China’s COVID-related lockdowns.

The OECD’s forecast is close to the 2.9% growth the World Bank predicted for this year on Tuesday.

“The unmistakable contrast between downbeat global growth assessments and central banks’ monetary-tightening push could be a significant headache for stock pickers,” said Stephen Innes, managing partner at SPI Asset Management.

Read: Inflation is coming for middle-class households as higher prices hit big-box stores. Will they cut back on discretionary purchases?

“With monetary policy feeding lower growth expectations, there is an elevated level of negative circulation here. Central banks continue to surprise to the hawkish side with no end in sight until inflation moves convincingly toward its target,” said Innes. “And while those tighter financial conditions are the obvious path toward lower inflation, they are also analogous to lower asset prices.”

The Central Bank of India followed up Tuesday’s bigger-than-expected hike in interest rates from the Reserve Bank of Australia, with an increase in its repo rate to curb rising inflation. The European Central Bank will meet Thursday, but is expected by some to hold off any hike until July.

U.S. crude oil prices

jumped 2% to $121.86 a barrel after ending Tuesday at a nearly three-month high, extending gains after government data showed an unexpected rise in U.S. crude inventories as well as an unexpected drop in gasoline stocks.

Key Words: Oil prices could go ‘parabolic’, putting global economy in ‘critical situation,’ says Trafigura chief

The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose 2 basis points to 3.003%. Yields and debt prices move opposite each other.

Read: Here’s why the stock market gets ‘squirrelly’ when bond yields rise above 3%

What companies are in focus?

Novavax Inc.

shares were down 3.7%, despite that an advisory committee to the U.S. Food and Drug Administration recommended its COVID-19 vaccine.

Shares of U.S.-listed Chinese tech names were rising, with stock in AlibabaGroup Holding Ltd.

up 11%, Pinduouo Inc.

up 6.1%, Tencent Music Entertainment Group

rising 5.4% and Bilibli Inc.

gaining 4.2% on signs of easing regulatory pressure after China’s regulatory body approved a number of videogame titles.

How are other assets trading?

The ICE U.S. Dollar Index

was flat.

Gold futures

were up 0.4% at $1,859.40 an ounce.


was down 3% at $30,270.

In European equities, the Stoxx Europe 600 index

fell 0.6% and the FTSE 100 index

dropped 0.1%

In Asia, the Shanghai Composite

rose 0.7%, Hong Kong’s Hang Seng Index

jumped 2.2%, and the Nikkei 225 index

rose 1%

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