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(Reuters) – The S&P 500 fell slightly on Tuesday after a three-session rally as volatile trading in oil prices kept soaring inflation in focus and investors reacted to hawkish comments from a Federal Reserve official.
Eight of the 11 major S&P 500 sectors were declining and after outperforming earlier in the session, energy lost ground and was last down 0.8% in late afternoon trading as oil prices turned negative.
This was after a report that some OPEC members were exploring the idea of suspending Russia’s participation in an oil-production deal, potentially paving the way for other producers to pump significantly more crude.
Healthcare and real estate were the biggest laggards for the session so far.
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.
Waller’s comments sparked a sell-off in bond markets, with the benchmark 10-year U.S. Treasury yield climbing to a one-week high, as traders scaled down expectations that the Fed might pause for breath after hikes in June and July.
“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, citing uncertainty about 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.”
Investors were not fretting so much about Tuesday’s meeting between U.S. President Joe Biden and Fed Chair Jerome Powell, according to Schleif who saw Biden’s urging the Fed to keep its focus on inflation as “a message to markets that inflation fighting has shifted to the highest priority of the Fed’s dual mandates versus getting to full employment.”
By 2:40 p.m. ET (1840 GMT), the Dow Jones Industrial Average fell 47.54 points, or 0.14%, to 33,165.42, the S&P 500 lost 0.89 points, or 0.02%, to 4,157.35 and the Nasdaq Composite added 20.74 points, or 0.17%, to 12,151.87.
All three indexes had rallied last week to snap a decades long losing streak.
Boosted by last week’s rally, the S&P 500 was up 0.5% for the month of May while the Dow was up 0.4% for the month. The tech-heavy Nasdaq was set for a 1.7% decline for the month.
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.
Other key data due this week is non-farm payrolls numbers for cues on the labor market.
U.S.-listed shares of Yamana Gold (NYSE:AUY) Inc climbed after South African miner Gold Fields (NYSE:GFI) Ltd agreed to buy the Canadian miner in a $6.7 billion all-share deal.
Dexcom (NASDAQ:DXCM) Inc jumped after the glucose monitoring systems maker denied a report on merger talks with insulin pump maker Insulet (NASDAQ:PODD) Corp.
The CBOE volatility index snapped a three-day decline and was last up at 37 points.
Declining issues outnumbered advancing ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and 29 new lows; the Nasdaq Composite recorded 46 new highs and 41 new lows.
