Stocks, oil, gas and crypto all trending higher after heavy market retreat Monday

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Symbol Price Change %Change
I:DJI $30,516.74 -876.05 -2.79%
SP500 $3,749.63 -151.23 -3.88%
I:COMP $10,809.23 -530.80 -4.68%

U.S. stocks were higher early Tuesday after a stock market selloff deepened Monday, with the S&P 500 entering a bear market and investors re-examining Friday’s red-hot inflation data and liking it even less.

Faced with rising chances of aggressive monetary tightening by the Federal Reserve, investors broadly unloaded risk. The S&P 500 slumped 3.9% as 495 of its 500 components ended the day lower. The declines left the U.S. stock benchmark down more than 20% from its January record, sending it into a bear market for the first time since 2020.

The energy segment, the only one of the S&P 500’s 11 sectors in positive territory this year, fell 5.1%, a steeper decline than that of the broad index. The utilities group, the second-best performer in 2022, also lagged behind the market with a daily drop of 4.6%. 

“We’re definitely seeing a risk-off atmosphere, a flight to quality,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “In that environment, people need to raise cash.” 

The S&P 500 fell 151.23 points, or 3.9%, to 3749.63. The Dow Jones Industrial Average dropped 876.05 points, or 2.8%, to 30516.74, while the tech-heavy Nasdaq Composite declined 530.80 points, or 4.7%, to 10809.23, off 33% from its November record. 

Markets have swung wildly this year as investors scramble to decipher how rapidly the central bank will raise interest rates in an attempt to tame sky-high inflation. Rock-bottom rates and other stimulative policies helped keep the economy — as well as markets — afloat as the arrival of the COVID-19 pandemic idled businesses and threw people out of work. Now, the Fed is trying to tame surging prices by unwinding that easy-money policy.

The Fed will begin its latest two-day policy meeting Tuesday, and most investors believe that the central bank will announce Wednesday it is raising its benchmark interest rate by half a percentage point. But expectations that the Fed will be forced to move even more aggressively this year have risen since Friday’s inflation data, which showed U.S. consumer prices rose 8.6% year over year in May, the fastest such increase since 1981.

The report jolted markets and intensified fears that the campaign of monetary tightening could tip the economy into a recession. Asian shares fell across the board Tuesday after Wall Street tumbled into a bear market, indicating that major U.S. benchmarks and individual stocks have fallen 20% or more from a recent high for a sustained period of time. 

Benchmarks fell in Japan, Australia, South Korea and China. The Japanese yen’s continuing slide against the dollar paused. Japan’s Nikkei 225 shed 1.8% to 26,496.91. Australia’s S&P/ASX 200 dipped 4.3% to 6,634.00 after reopening from a holiday on Monday. South Korea’s Kospi lost 1.0% to 2,479.83. Hong Kong’s Hang Seng slipped 0.4% to 20,990.98, while the Shanghai Composite edged down 1.2% to 3,217.72. 

Adding to worries about the fragile Japanese economy is the sliding yen, recently at 135, the lowest level against the U.S. dollar since 1998.

The U.S. dollar rose to 134.62 Japanese yen from 134.46 yen, as the yen’s weakness was mitigated somewhat by Bank of Japan Gov. Haruhiko Kuroda’s comments expressing concern about its decline. 

The euro cost $1.0426, up from $1.0409. 

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