Most Stocks Fall on Wall Street as Crude Oil Prices Rise | National

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By STAN CHOE – AP Business Writer

NEW YORK (AP) — U.S. stocks tumble Tuesday as Wall Street nears the end of a tumultuous month, battered by worries about a possible recession, inflation and rising interest rates.

The S&P 500 was down 0.9% at midday. The Dow Jones Industrial Average was down 270 points, or 0.8%, at 32,942 as of 11:34 a.m. EST, and the Nasdaq composite was down 0.8%.

Underlining concerns about inflation, oil prices rose after the European Union agreed to block the majority of oil imports from Russia due to its invasion of Ukraine. Benchmark U.S. crude rose 1.8% to $117.19 a barrel. Brent crude, the international standard, rose 2 cents to $117.62 after rising above $120.

The more than 50% jump in oil prices so far this year has been a major contributor to the very high inflation that is sweeping the world. Earlier on Tuesday, a report showed inflation in the 19 countries that use the euro hit 8.1% in May, the highest level since records began in 1997.

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In the United States, President Joe Biden will meet with Federal Reserve Chairman Jerome Powell on Tuesday as soaring inflation continues to eat away at Americans’ incomes.

Tuesday’s meeting will be the first since Biden reappointed Powell as head of the central bank and weeks after the Senate confirmed a second term. The White House said the couple would discuss the state of the US and global economy and in particular the four-decade high inflation, described as Biden’s “top economic priority”.

The S&P 500 is on track for a 0.3% loss in May, which would take it 14.1% below its record high set earlier this year. But the month’s slight movement belies the big swings that have rattled investors along the way.

For the first time since the dot-com bubble burst two decades ago, the S&P 500 fell seven straight weeks through mid-May. Softening data on the U.S. economy has heightened fears that high inflation will force the Federal Reserve to raise interest rates so aggressively that it will trigger a recession.

Some top retailers also said inflation was eating away at their profits, adding more urgency to concerns. They all combined to bring Wall Street to the brink of what’s called a bear market, where the S&P 500 was poised to close more than 20% below its all-time high.

“Outside of a peace deal in Ukraine, it’s hard to justify more than a bearish rally,” which would only be a temporary rise in stocks, wrote Morgan Stanley strategists led by Michael Wilson in a report. . They said that the more stock prices rise, the more likely the Federal Reserve will be to raise interest rates.

But stocks have managed to avoid a full-fledged bear market, at least so far, with the S&P 500 yet to close more than 20% below its all-time high. The S&P 500 just had its best week in a year and a half, partly on hopes that inflation has peaked and is starting to moderate. Speculation has grown that the Fed may consider a pause in rate hikes at its September meeting.

The easing of anti-COVID restrictions in China has also helped, alleviating some of the worries about the world’s second-largest economy and more problems with global supply chains.

Chinese factory activity contracted again in May, but has almost started to grow again. More factories, shops and other businesses are allowed to reopen this week in Shanghai and the Chinese capital, Beijing, after authorities said outbreaks were under control.

US Treasury yields rose on reports that US consumer confidence was stronger than economists expected and house prices rose more than expected.

The 10-year Treasury yield climbed to 2.86% from 2.75% on Friday night.

Starting Wednesday, the Fed will begin allowing some of the trillions of dollars in Treasuries and other bonds it amassed during the pandemic to come off its balance sheet. Such a move should put upward pressure on long-term Treasury yields, and it is one of the ways the Fed is trying to stamp out inflation by slowing the economy.

AP Business Writer Elaine Kurtenbach contributed.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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