Tuesday, May 31, 2022

US Market Wrap 05/31/2022

- In stocks, a stormy May concluded almost precisely where it began, with a late-session plunge on Tuesday placing the S&P 500 less than a point higher than it was a month ago. It was an ironic finale to a month marked by increased volatility and heated disputes over inflation, the Federal Reserve's plan to control it, and the economy's implications.

- The S&P benchmark index increased by more than 8% in May after falling within points of a 20% decline from a record low, indicating a bear market.

- Treasury yields on ten-year notes rose 12 basis points to 2.85%, barely below where they were at the start of the month. The price of West Texas Intermediate oil remained unchanged, leaving it 10% higher for the month.

- Bitcoin remained above $31,000 after a 17 percent drop in May.

- On concerns about the economy, equities started the day down. The argument over how rapidly central banks would raise interest rates has intensified as inflation has become more persistent. Consumer prices in the eurozone increased by 8.1% in May compared to the same month the previous year, setting a new high. Meanwhile, WTI Crude oil has lost ground following the European Union's partial ban on russian oil. The value of the dollar increased.

- Fears that central bank rate hikes may send the economy into a recession are keeping markets on edge as food and energy prices rise. Stocks experienced near-unprecedented volatility in May, with the S&P 500 plunging more than 3% three times and capping its longevity.

- The moves come amid doubts over whether the market is nearing a bottom and high volatility. Swaps show that traders have almost fully priced in two half-point rate hikes in June and July, with a third hike in September seeming likely.

- On Tuesday, Federal Reserve Chair Jerome Powell will meet with Biden in a rare oval office meeting to discuss inflation ahead of the release of US payroll figures later this week. The meeting comes after Fed Governor Christopher Waller suggested on Monday that the Fed should maintain raising rates in half-percentage point increments until inflation returns to the central bank's target.

- Individual stock swings included Deutsche Bank AG slipping after authorities raided the lender's and its asset management unit's Frankfurt offices. The stock of Unilever soared when activist investor Nelson Peltz was appointed to its board of directors. and US-listed Chinese stocks, notably Alibaba Group rose, putting the shares on track to erase monthly losses as investors were heartened by the relaxation of lockdown measures in major cities and better-than-expected economic statistics.