U.S. stocks finished lower Wednesday, failing to build on back-to-back gains, as oil prices ended at a three-month high and investors awaited inflation data due at the end of the week.
What did major indexes do?
The Dow Jones Industrial Average
lost 269.24 points, or 0.8% to finish at 32,910.90, but off the session’s low of 32,824.37.
The S&P 500
declined 44.91 points, or 1.1%, closing at 4,115.77.
The Nasdaq Composite
shed 88.96 points, or 0.7%, ending at 12,086.27.
On Tuesday, major indexes rose solidly, posting back-to-back gains.
What drove markets?
Stocks closed lower in muted trade, as investors looked ahead to Friday’s consumer-price index for May, but also monitored surging oil prices.
“Volume is equivalent to conviction — and we don’t have volume,” said Kent Engelke, chief economic strategist at Capitol Securities Management, by phone.
He pointed to market jitters around the Federal Reserve’s plans to tighten monetary policy, liquidity concerns, and recent economic warnings from a several major U.S. banks as keeping a damper on sentiment, likely at least until Friday’s monthly reading on inflation.
“We are kind of sitting on our hands,” Engelke said, noting that most subsectors of the S&P 500 index lost ground Wednesday. The energy sector was an exception, closing up 0.2%, according to FactSet.
“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,” Scott Ladner, chief executive at Infrastructure Capital Management said in a phone interview.
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.
“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 2.3% to settle at $122.11 a barrel to end at a three-month high, extending gains after government data showed an unexpected fall in gasoline inventories.
The yield on the 10-year Treasury note BX:TMUBMUSD10Y rose 5.9 basis points to 3.028%, heading closer to its one-year peak of 3.124% reach a month ago.
What companies were in focus?
Altria Group Inc.
shares fell 8.4%, after Morgan Stanley analyst Pamela Kaufman turned bearish on the cigarette and heated tobacco seller, citing inflation pressures and long-term competitive risks.
shares rose 0.8% after The Washington Post reported Wednesday that the social-media platform plans to share a full data stream with Tesla Inc.
chief Elon Musk as it looks to secure a closing of their pending merger arrangement,.
Shares of Walmart Inc.
dipped 0.9% after Rob Walton, heir to the big-box retailer, won a bid for the NFL’s Denver Broncos franchise for $4.6 billion, the most ever paid for a franchise in the sport’s history, according to ESPN.
shares rose 5.4%, after an advisory committee to the U.S. Food and Drug Administration recommended its COVID-19 vaccine.
Shares of U.S.-listed Chinese tech names rose, with stock in AlibabaGroup Holding Ltd.
up 14.7%, Pinduouo Inc.
up 9.7%, Tencent Music Entertainment Group
rising 5.4% and Bilibili Inc.
gaining 6% on signs of easing regulatory pressure after China’s regulatory body approved a number of videogame titles.
How did other assets trade?
The ICE U.S. Dollar Index
was up 0.2%.
rose 0.2% to settle at $1,856.50 an ounce.
was down 3% at $30,135.
—Barbara Kollmeyer contributed reporting to this article.