Wall Street ends mixed ahead of key inflation update

The Dow Jones index fell for a fourth straight session with the yield on the benchmark 10-year US bond edging lower. Nasdaq, S&P 500 edged higher.

Dip buyers led to wild swings on Wall Street. File Picture: Michael M Santiago/Getty Images.

US stocks swung between gains and losses on Tuesday as uncertainty over inflation, interest rates and the economy continued to weigh on the market.

All three major indexes opened higher, with the technology-heavy Nasdaq Composite up 2.8 per cent at one point.

By late morning, stocks had mostly erased those gains and appeared on track to extend a brutal three-day slide.

But as the afternoon wore on, investors turned their attention to Wednesday’s (US time) report on consumer prices and the possibility that inflation may be peaking – and stocks rebounded again.

The S&P 500 closed up 0.2 per cent at 4001.05, a day after the broad index slumped 3.2 per cent to its lowest level for the year. The Nasdaq Composite Index climbed 1 per cent to 11737.67.

“The market was taking too negative of a read on the consumer-price index, leading to the afternoon recovery,” said Matt Peron, director of research at Janus Henderson Investors.

The Dow Jones Industrial Average fell for a fourth straight trading session, hitting a 52-week low. It closed down 0.3 per cent at 32,160.74.

A cocktail of geopolitical risks and economic headwinds is posing the biggest threat to global growth in years and rattling markets.

In the US, soaring inflation has prompted the Federal Reserve to begin raising interest rates and investors fear the move could tip the economy into recession.

Global markets are looking equally troubled.

In China, resurgent Covid-19 outbreaks and Beijing’s strict approach to fighting them threaten to revive the supply chain bottlenecks that first drove inflation higher.

In Europe, the war in Ukraine threatens to keep energy prices elevated and is weighing on the region’s growth.

“People came in this morning expecting a relief rally after being hammered the last few days,” said Joe Quinlan, head of CIO Market Strategy for Merrill and Bank of America Private Bank.

“But with inflation in the US, the Covid challenges in China and the war in Ukraine, rarely have we seen three major market-moving catalysts converge.”

Early Tuesday, some investors snapped up shares that had been battered by those headwinds.

“Everyone at this point is looking to see if we’ve bottomed,” said Quincy Krosby, chief equity strategist for LPL Financial.

“The instincts are that we haven’t bottomed yet.”

Wednesday’s report on fresh consumer-price index data is expected to show inflation rose at a slower pace in April than the previous month, Ms Krosby said.

Investor sentiment can turn on a dime, she added.

Federal Reserve Bank of New York President John Williams said he believes the Fed can achieve a “softish landing” for the US economy while raising rates, though the unemployment rate could rise.

Investors on Tuesday were welcoming signs that the conflict in Ukraine wasn’t escalating and a planned EU embargo on Russian oil could face delays.

Among individual stocks, Peloton Interactive fell 8.7 per cent after reporting declining sales and mounting losses as the stationary-bike maker struggles with the return to pre-pandemic consumer habits.

Biohaven Pharmaceutical Holding surged 68 per cent after Pfizer said it would buy the rest of the company for around $US11.6bn ($A16.68bn).

The yield on the benchmark 10-year Treasury note edged down to 2.99 per cent from 3.08 per cent on Monday.

Brent crude oil fell 3.3 per cent, to $US102.46 a barrel. Oil prices had been rising for the past few months, but concerns that China’s lockdowns will sap demand for commodities have taken some steam off the rally.

Demand for oil in China is likely to rebound sharply when restrictions start to ease, though the European Union’s proposed ban on imports of Russian oil remains an overhang, said Daniel Hynes, a senior commodity strategist at ANZ in Sydney.

“The fundamentals are still very tilted toward an extremely tight market with certainly risks skewed to further declines in supply over the next three to six months,” Mr Hynes said.

Bitcoin prices edged lower after a steep sell-off.

The Wall Street Journal