Tuesday May 31st

U.S. stock index futures fell in early Tuesday morning trade, as the momentum from a sharp rebound last week appeared to fade. Dow Jones Industrial Average futures shed about 235 points, or 0.7%. S&P 500 futures dipped 0.6%, and Nasdaq 100 futures eased 0.2%. The U.S. stock market did not open Monday due to the Memorial Day holiday. Tuesday’s moves came amid mounting concerns that rising inflation in the U.S. and around the world could slow down economic growth. In Europe, euro zone inflation hit a record high for a seventh straight month, surging 8.1% in May. In the U.S., the core personal consumption expenditures price index — the Fed’s preferred inflation gauge — rose by 4.9% in April from a year ago. “It will be difficult to reverse the Fire and Ice,” Morgan Stanley’s Mike Wilson wrote. “Higher inflation and slower growth are now the consensus view but that doesn’t mean it’s fully discounted. The more equity prices rise, the more hawkish the Fed will be.” Worries over higher inflation also grew as oil prices jumped following the European Union agreeing to ban most crude imports from Russia. West Texas Intermediate futures rose about 3% to more than $118 per barrel. Brent crude, the global oil benchmark, rose 1.7% to more than $123 per barrel. The Dow and the S&P 500 were coming off their best weekly gains since November 2020. The blue-chip average closed up 6.2% for the week, ending an eight-week losing streak. The S&P 500 gained 6.5%, and the Nasdaq gained 6.8% on the week, ending positive after seven continual weeks of losses. Solid earnings from the retail sector, as well as an inflation report that showed prices could be easing, lifted investor sentiment. A chunk of last week’s gains came Friday, when the Dow rallied more than 550 points, and the S&P 500 popped 2.5%. The Nasdaq, meanwhile, rallied 3.3%, boosted by solid reports from tech companies, as well as a dip in the 10-year Treasury yield. Still, traders continue to deliberate whether the bounce marks a bottom as stocks remain well off their highs. The Dow is 10.1% below its 52-week high, the S&P 500 is down 13.7%, and the Nasdaq is off by about 25.2%. “We could get some sharp snapbacks in stocks that won’t represent a true turning point for the market,” Strategas investment strategist Ryan Grabinski said in a Friday report. “The building of a bear market is a process, and we could still decline further.” Traders will look through more corporate quarterly earnings during the holiday-shortened week. Salesforce, HP and Victoria’s Secret are expected to report earnings on Tuesday after the bell. Shares in Asia-Pacific were mixed on Tuesday as investors watched for market reaction to the release of official Chinese factory activity data for May. Oil prices rose after EU leaders agreed to ban 90% of Russian crude. The Shanghai Composite in mainland China advanced 1.19% on the day to 3,186.43 while the Shenzhen Component jumped 1.922% to 11,527.62. Hong Kong’s Hang Seng index climbed 0.89%, as of its final hour of trading. The Nikkei 225 in Japan closed 0.33% lower at 27,279.80 while the Topix index declined 0.51% to 1,912.67. Over in South Korea, the Kospi climbed 0.61%, ending the trading day at 2,685.90. Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year. U.S. crude futures for July were trading just under 3% higher at $118.46 per barrel by 8 a.m. ET, while Brent crude futures were up 1.44% at $123.42. At one point, U.S. crude rose to $119.42 per barrel — a 12-week high, according to Refinitiv data. Contracts for August also traded higher: WTI crude pared some gains to trade around 3% higher at $115.63, and Brent was up 1.4% at $119.22 per barrel by 8 a.m. ET. Gold prices fell on Tuesday as U.S. bond yields firmed and the dollar strengthened, with bullion heading for a second straight monthly loss for the first time since March 2021. Higher U.S. 10-year Treasury yields lower the appeal of zero-yield gold, while a stronger dollar makes greenback-priced bullion more expensive for overseas buyers. Spot gold fell 0.3% to $1,849.96 per ounce, bringing its monthly loss to 2.4% so far, and is the biggest loss since September. U.S. gold futures also slipped 0.3% to $1,846.