Wall Street crept modestly lower for a second straight day Tuesday, following a weekslong rally that carried markets to an 10-month high.
Futures for the S&P 500 and the Dow Jones Industrial Average were off less than 0.1% in premarket trading.
With earnings season winding down and few major economic reports scheduled this week, traders have little new data to work with when assessing the state of the economy, which has been flashing contradictory signs for more than a year.
Traders are worried rate hikes by the Federal Reserve and central banks in Europe and Asia to cool inflation that was at multidecade highs will push the global economy into a recession. They hope signs of slowing U.S. activity will prompt the Fed to postpone or scale back another possible rate increase at its meeting this month.
The U.S. government is due to release an update on inflation next week ahead of the Fed meeting.
Even if the Fed puts off a rate hike this month, Wall Street is betting on another increase in July after officials examine more data.
High interest rates led to three high-profile U.S. bank failures and one in Switzerland that rattled financial markets. Manufacturing also has been weakening.
Last week’s data showed that U.S. employers unexpectedly accelerated hiring in May, while increases in workers’ wages diminished. That helped propel Wall Street to the brink of a “bull market,” or an increase of 20% in the S&P 500 over its mid-October low.
Wall Street’s benchmark S&P 500 index lost 0.2% on Monday after an industry group’s May index of activity in construction, hospitality and other services fell to a three-year low. That conflicted with hopes raised by data last week that showed unexpectedly strong hiring, suggesting a potential U.S. recession brought on by interest rate hikes might be farther away.
The Dow fell 0.6% and the Nasdaq composite slipped 0.1% after the Institute for Supply Management reported its service industry index declined to 50.3 from April’s 51.9 on a 100-point scale on which numbers above 50 show activity increasing.
“Weakness is emerging and that should be more noticeable in the coming months,” Edward Moya of Oanda said in a report.
In European trading, the FTSE 100 in London and the CAC 40 in Paris each fell around 0.2%. The DAX in Frankfurt was flat.
Wheat prices jumped 3% after a dam collapsed in southern Ukraine, triggering floods and endangering Europe's largest nuclear power plant. Ukraine accused Russian forces of blowing up the Kakhovka dam and hydroelectric power station on the Dnieper River, while Russian officials blamed Ukrainian military strikes in the contested area.
It's unclear whether the surge in wheat prices was due to a real threat of dam floodwaters destroying crops. Commodity prices surged after Russia's invasion of Ukraine more than a year ago.
Ukraine and Russia are key global suppliers of wheat, barley, sunflower oil and other food to Africa, the Middle East and parts of Asia where millions of impoverished people lack enough to eat.
In Asia, the Shanghai Composite Index fell 1.2% to 3,195.34 and the Hang Seng in Hong Kong shed 0.2% to 19,072.42.
The Nikkei 225 in Tokyo gained 0.9% to 32,506.78 after government data showed Japanese wages rose 1% over a year earlier in April but growth slowed from the previous month's 1.3%.
The S&P ASX 200 in Sydney shed 1.2% to 7,129.60 after Australia’s central bank lifted its benchmark interest rate by 0.25 percentage points to 4.1% and warned further rises could follow. That came after inflation was stronger than expected at 6.8% in the January-March quarter.
India's Sensex lost 0.2% to 62,653.68. New Zealand and Jakarta advanced while Singapore and Bangkok declined. South Korean markets were closed for a holiday.
In energy markets, benchmark U.S. crude lost $1.49 to $70.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 41 cents to $72.15 on Monday. Brent crude, the price basis for international oil trading, sank $1.42 to $75.29 per barrel in London. It advanced 58 cents the previous session to $76.71.
The dollar was almost unchanged at 139.62 yen from Monday's 139.63 yen. The euro slipped to $1.0682 from $1.0715.
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