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Business

Stock Futures, Oil Drop After Rally

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U.S. stock futures fell, oil prices dropped and bond yields ticked lower after major indexes rallied to start the trading week, with recent volatility in markets showing few signs of abating.

Futures for the S&P 500 declined 1.4% Wednesday. Contracts for the tech-focused Nasdaq-100 contracted 1.6% and futures for the Dow Jones Industrial Average receded 1.2%. U.S. stocks rallied Tuesday off their worst week since March 2020, offering investors a reprieve from a recent stretch of whipsaw trading that had sent stocks and cryptocurrencies falling.

Stocks have seen sharp moves in recent weeks following aggressive interest-rate increases from the Federal Reserve, with more expected, as central banking officials seek to put a cap on inflation. Investors have scrambled to unload riskier assets amid growing fears that quick tightening of financial conditions will plunge the U.S. economy into a recession. The S&P 500 is on track for its worst first half of the year in decades, according to Deutsche Bank research analysts. 

Recession fears weighed on shares of energy, autos and travel companies in premarket and European trading.

Occidental Petroleum

declined 4.1% premarket, while

Halliburton

shares fell 3.9%.

United Airlines Holdings

fell 3.3%.

The

Cboe

Volatility Index—Wall Street’s so-called fear gauge, also known as the VIX—rose 3.6% to 31.29.

Investors sought assets viewed as safer to hold Wednesday, such as the U.S. dollar and U.S. government debt. The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, added 0.2%. 

In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 3.228% from 3.304% Tuesday. Yields fall when prices rise. 

“There is certainly an anxiousness in markets and that’s playing through in volatility,” said

Edward Park,

chief investment officer at U.K. investment firm Brooks Macdonald, adding that investors are likely awaiting fresh inflation data or a central bank meeting to assess their future trades.

Fed Chairman

Jerome Powell

is set to testify before Congress on both Wednesday and Thursday. Investors will be watching his words for clues about the future path of monetary policy.

In energy markets, Brent crude, the international benchmark for oil prices, dropped 4.4% to $109.63 a barrel. President Biden is planning to call for a temporary suspension of the federal gasoline tax, The Wall Street Journal reported. Energy prices remain near historically high levels as Russia’s invasion of Ukraine has caused Western nations to move rapidly away from Moscow’s supplies. 

“This is a reminder for markets that governments are unlikely to sit back and take a higher oil prices,” Mr. Park said. 

The dollar value of bitcoin, the world’s largest cryptocurrency by market value, edged down 2.1% from its 5 p.m. ET level Tuesday to trade at $20,393.06, according to CoinDesk. Cryptocurrencies have fallen recently amid broad investor desire to get out of speculative assets and concerns about the future of some crypto companies. 

U.S. stocks rallied Tuesday off their worst week since March 2020.



Photo:

Seth Wenig/Associated Press

Overseas, the pan-continental Stoxx Europe 600 declined 1.6%, with losses led by the basic resources, oil-and-gas and autos sectors. 

In Asia, major indexes closed with losses. South Korea’s Kospi declined 2.7%, China’s Shanghai Composite fell 1.2% and Japan’s Nikkei 225 edged down 0.4%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Navigating the Bear Market

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Business

Stock Market Jumps After S&P 500’s Worst Week in Two Years

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U.S. stocks rallied Tuesday off their worst week since March 2020, offering investors a reprieve from a recent stretch of whipsaw trading that had sent stocks and cryptocurrencies falling.

The S&P 500 gained 89.95 points, or 2.4%, to 3764.79. The Dow Jones Industrial Average added 641.47, or 2.1%, to 30530.25. The Nasdaq Composite Index jumped 270.95 points, or 2.5%, to 11069.30. The U.S. stock market was closed Monday for the Juneteenth federal holiday. 

Bitcoin rose alongside other cryptocurrencies, continuing to claw back some losses after a bruising weekend. Bitcoin rose to $20,836.15, up 1.9% from its 5 p.m. ET value Monday, and about 18% higher from a recent low of $17,601.58 reached Saturday, according to CoinDesk data.

Investors’ appetite for riskier assets on Tuesday follows a tumultuous week in the markets, sparked by the Federal Reserve’s approval of a 0.75-percentage-point interest-rate increase, the largest since 1994. Investors scrambled to unload riskier assets amid growing fears that central bankers will plunge the U.S. economy into a recession. The benchmark S&P 500 finished the week 5.8% lower, its largest one-week decline in more than two years.

Meanwhile, investors await further commentary from Federal Reserve Chairman

Jerome Powell

when he testifies before Congress on both Wednesday and Thursday.

“Investors will be looking for any inkling as to whether Chair Powell’s commitment to another 0.75 percentage point rate hike is serious,” said

Michael Farr,

president of Farr, Miller & Washington.

Both investors and policy makers are eager to see the June print for consumer inflation expectations, due Friday. At his news conference last week, Mr. Powell said the preliminary reading of 5.4% was “eye catching.”

“Markets are going to watch the final read for consumer inflation expectations in the University of Michigan survey. They want to see how aggressive the Fed will have to be,” said

Rob Haworth,

senior investment strategist at U.S. Bank Wealth Management. “If expectations stop accelerating, markets may read that as Fed policy starting to work.”

Investors and analysts say they expect more pain ahead in the markets, though some are still willing to wade in and buy stocks at a discount after a selloff that has dragged the S&P 500 down 21% this year. Many pointed to Tuesday’s recovery as a bounce off last week’s drawdown.

“This still feels like a bit of a dead-cat bounce,” said

Viraj Patel,

global macro strategist at Vanda Research, referring to a term used to describe a brief market rally. He said investors’ willingness last week to dump shares of winning sectors this year, including energy and utilities stocks, might be a signal that this year’s drawdown has entered its latter stages. Still, he said, he believes the selloff “still has legs to go.”

Tuesday’s bullish mood came alongside a selloff in U.S. government bonds, sending the yield on the 10-year U.S. Treasury note higher. The yield on the benchmark note traded at 3.304%, up from 3.238% Friday. Yields and bond prices move in opposite directions.

Government leaders and officials in recent days have tried to assuage an increasingly jittery nation that an economic slowdown isn’t guaranteed. President

Biden

on Monday said he spoke with

Lawrence Summers,

a former Treasury secretary, and reiterated that he doesn’t see a recession as inevitable. Federal Reserve Bank of St. Louis President

James Bullard

also said the economy appears on track for more expansion this year.

Still, many market watchers are bracing for an economic downturn. In a note Monday, a team of

Goldman Sachs

economists increased their outlook for a U.S. recession, citing concerns that the Fed will feel compelled to respond forcefully to inflation data, even if economic activity slows. The team now sees a 30% probability of entering a recession over the next year, versus 15% previously, and a 25% probability of entering a recession in the second year if one is avoided in the first. 

Safe-haven assets retreated Tuesday amid improved investor sentiment.



Photo:

Spencer Platt/Getty Images

U.S. stock market gains were broad-based, with all 11 of the S&P 500’s sectors rising on Tuesday.

Energy stocks led their peers.

Diamondback Energy

rose $9.99, or 8.2%, to $132.28.

Exxon Mobil

climbed $5.36, or 6.2%, to $91.48.

Brent crude, the international benchmark, rose for a second day, climbing 0.5% to $114.65 a barrel. Last week, oil prices fell amid concerns that a possible recession would weigh on energy demand.

Growth stocks, which have been beaten down this year, notched gains. Data and software company Palantir Technologies and chip maker Nvidia both gained more than 4%.

Seema Shah,

chief strategist at Principal Global Investors, said that for now, investors may see value in companies whose shares have been badly beaten down this year. However, she said, she expects the market to fall further once investors begin to see consistent declines in earnings growth.

“I think what you could see is a [modest] rally through the summer…and as you get into the autumn months and the next earnings season, I think a lot of the economic data is going to start to turn and earnings growth is going to start to turn,” she said. Still, she noted, even now, “sentiment is deteriorating very rapidly.”

Overseas, the pan-continental Stoxx Europe 600 rose 0.4%. In Asia, trading was mixed. Hong Kong’s Hang Seng rose 1.9% and Japan’s Nikkei 225 gained 1.8%, while China’s Shanghai Composite lost 0.3%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Eric Wallerstein eric.wallerstein@wsj.com 

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Business

U.S. Stocks Rise as Volatile Trading Persists

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U.S. stocks were higher Friday, putting major indexes on course to extend the whipsaw moves that have injected fresh volatility into markets this week.

The S&P 500 rose 0.7%. The Dow Jones Industrial Average added 0.3%, and the Nasdaq Composite climbed 1.4%. All three major indexes fell Thursday, closing at their lowest levels since 2020. Thursday’s decline reversed a rally in stocks Wednesday. 

Stock indexes are on track to finish the week with sharp losses as investors have tried to assess inflation, central banks’ response to it and the outlook for the global economy. The Federal Reserve earlier this week approved the largest interest-rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades to fight inflation.

Recent rate increases have reversed a prior cycle of loosening monetary policy that allowed prices for both stocks and bonds to rally in recent years. Prospects for repeated rate rises throughout the rest of the year have caused investors to sell out of both assets and lent to fears that rapid tightening could reduce growth. U.S. mortgage rates recently reached their highest level in more than 13 years. Recent economic data reports have shown sharp declines in key sectors.

“The central banks, who have been our friends for a very long time, are telling us we should expect pain,” said Hani Redha, a portfolio manager at PineBridge Investments. “That inflation number is the only thing that matters right now. Even if we see growth slowing a lot, that will not be enough to cause the Fed to change course.” 

Mr. Redha said it is possible that inflation could still climb further in the coming months as energy prices remain elevated. Brent crude, the international benchmark for oil prices, edged down 2.4% to $117.03 a barrel. 

European natural-gas prices edged down 0.6% Friday, putting them up almost 50% for the week. Moscow’s move to slash natural-gas exports to Europe this week has pitched the continent’s energy crisis into a dangerous new phase that threatens to drain vital fuel supplies and kneecap the continent’s economy.

Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ

Signs remained that investors sought assets viewed as safe to hold, such as the U.S. dollar and U.S. government bonds. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, rose 0.9%. In bond markets, the yield on benchmark 10-year Treasurys ticked down to 3.262% from 3.303% Thursday. Yields fall as prices rise. 

The dollar value of bitcoin and other cryptocurrencies showed tepid signs of stabilizing after tumbling sharply over the 10 days prior. Bitcoin was roughly unchanged from its 5 p.m. ET level Thursday to trade at $20,637 Friday. Cryptocurrencies have been hit by rising interest rates that are sapping appetite for riskier assets, and concerns about select projects and companies in the crypto ecosystem. 

Shares of

Adobe

fell 4.1% after the provider of software for creativity, marketing, and documents gave softer-than-expected guidance.

Overseas, the pan-continental Stoxx Europe 600 added 0.7%. Shares of commodity mining and trading giant

Glencore

added 0.8% in London trading after the company raised price and cost guidance for its coal operations and said that its trading business is outperforming expectations.

Stocks on Wall Street closed sharply lower on Thursday, with Dow Jones Industrial Average below 30000.



Photo:

BRENDAN MCDERMID/REUTERS

In Asia, the

Bank of Japan

maintained ultralow interest rates on Friday, confirming that it won’t join the Federal Reserve and other major global central banks in tightening monetary policy. Japan’s Nikkei 225 stock index fell 1.8% and the Japanese yen fell 1.8% against the dollar. 

South Korea’s Kospi edged down 0.4%, while China’s Shanghai Composite added 1%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Inflation and the Economy

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Business

U.S. Futures Edge Up After S&P 500 Slides Into Bear Market

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U.S. stock futures edged higher, pointing to muted gains for major indexes after the S&P 500 closed in a bear market for the first time since 2020. 

Futures tied to the S&P 500 added 0.5% after the broad-market index tumbled 3.9% on Monday. Nasdaq-100 futures climbed 0.8%, suggesting a moderate rise in technology stocks after the opening bell. Dow Jones Industrial Average futures inched up 0.4%. 

Global stocks have come under pressure in recent weeks on concerns that major central banks will have to move more aggressively than expected to combat inflation. The latest data release on consumer prices in the U.S. further stoked these fears, as it rose from the previous month to 8.6% and reached the highest level in more than four decades. The S&P 500 declined for the past four straight trading sessions, losing over 10%. The index is down nearly 22% from its last record high.

“I wouldn’t necessarily read a lot into a sort of mini reversal. Things got really oversold and now people are just going to wait for the Fed,” said Colin Graham, head of multiasset strategy at Robeco. 

The Federal Reserve is set to release a monetary policy decision on Wednesday, after a two-day meeting. The Wall Street Journal reported on Monday that the policy makers are considering a surprise 0.75-percentage-point interest-rate increase. 

Some investors are likely to be bargain shopping after such a sharp decline across markets, Mr. Graham said. “At one point yesterday, every single stock in the S&P 500 was down. As long-term investors, we search for value as long as the economic damage isn’t too great.”

Investors are struggling to come to terms with powerful forces in the market: soaring inflation that erodes consumer purchasing power, and the prospect of a recession that could damage company profits and tip weaker companies into failure. One bond market indicator, the yield curve difference between two-year and 10-year government debt, briefly inverted overnight, flashing a warning that a recession could be ahead. In the New York morning, it rose to 0.015 percentage point. 

The U.S. yield curve last inverted in April, when shorter-dated Treasury yields rose more than longer-dated ones on expectations that the Fed could raise rates at a quick pace following a strong jobs report.

Bond markets were broadly more stable on Tuesday. The yield on the benchmark 10-year Treasury note declined to 3.337% from 3.371% on Monday, reversing direction after four consecutive days of rises. Prices rise when yields fall. 

The yield on some shorter-dated bonds rose further, with the two-year edging up to 3.322% from 3.279% the day before, after its biggest two-day jump since the week after Lehman Brothers collapsed, according to an analysis by

Deutsche Bank.

The producer-price index, a measure of inflation for domestic producers, rose 10.8% on a 12-month basis in May, a slight decrease from the previous month.

While many markets have come under pressure this year, rising rates have had a particularly large effect on the shares of money-losing companies that were once pandemic darlings and other speculative bets. Higher interest rates on safe-haven assets such as government bonds tend to reduce the relative appeal of riskier investments—and the perceived value of future cash flows—while lifting corporate borrowing costs.

“I don’t think we’re going to see anything like a V-shaped recovery,” Rick Pitcairn, chief investment officer at Pennsylvania-based multifamily office Pitcairn, said of the stock market. “The way we’ll rebuild will be in a more muted way—it won’t be right back to the high-speculation stocks.”

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around. Illustration: Jacob Reynolds

In premarket trading, business-software firm

Oracle

jumped 12% after reporting a rise in quarterly sales that beat analysts’ expectations, driven by its cloud-computing division. Oil producer

Continental Resources

rose nearly 9% after billionaire

Harold Hamm

offered to buy the shares his family doesn’t already own for around $4.3 billion.

Cryptocurrency platform

Coinbase

tumbled 7% ahead of the bell after it said it will reduce its workforce by about 18%. JPMorgan cut its price target for the stock. 

Bitcoin remained under pressure after selling off sharply in recent days. It traded at about $22,150 on Tuesday, losing another 5%. It is 68% down from its last record high.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.6%. Shares of French IT firm Atos plunged 24% after its CEO resigned and the company said it plans to spin off its big data and security division. 

Bonds issued by the Greek government, one of the weakest European economies, sold off. The 10-year yield rose to 4.607%, the highest level since November 2018.

In Asia-Pacific trading, Australian stocks led losses after the market reopened following a holiday. The S&P/ASX 200 index in Sydney erased 3.6%, its biggest one-day drop in percentage terms in more than two years. 

The Shanghai Composite Index rose 1%, while Hong Kong’s Hang Seng Index closed flat. Japan’s Nikkei 225 fell 1.3%. 

The Japanese yen little changed, hovering close to the weakest level to the dollar in 24 years, which it reached on Monday. 

In commodities, Brent crude, the global oil benchmark, gained 1.4% to trade at $123.90.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

Shares in Asia remained under pressure on Tuesday.



Photo:

franck robichon/Shutterstock

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Business

Stocks Trade Modestly Higher – WSJ

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U.S. stock indexes edged higher Tuesday, reversing course after a profit warning from

Target

cast a pall over the retail sector.

The S&P 500 rose 0.4%. The Nasdaq Composite ticked up 0.4%, while the Dow Jones Industrial Average increased 0.3%. 

Stocks have swung in recent days, buffeted by shifts in views about the strength of the economy and the likely path for central banks and interest rates. A big concern is that central banks could act too aggressively as they combat inflation and trigger a slowdown in economic growth, or even a recession.  

“We’re still in this constant push and pull about where inflation is going to be, where growth is going to be, and whether we’re going to be in a recession or not,” said Fahad Kamal, chief investment officer at Kleinwort Hambros. 

Target shares dropped 3% after the retailer issued a warning that its profit would decline because it needs to cancel orders or offer discounts to clear out unwanted goods, a potential sign of lower consumer spending. Shares of other big retailers followed, with

Walmart

declining more than 2%.

A significant increase in retail inventories and diminishing demand could cause prices to moderate across most consumer goods in the second half of the year, according to Peter Essele, head of portfolio management at Commonwealth Financial Network.

“That would be a good thing for inflation overall and would help buoy markets higher as inflation continues to decline,” Mr. Essele said.

The trade gap in the U.S. for April narrowed to $87.1 billion, shrinking more than economists had forecast, after reaching a record deficit the prior month. A key release this week will be the consumer-price index on Friday, which will be closely watched for signals on whether inflation is weakening or not.  

Ayako Yoshioka, a senior portfolio manager at Wealth Enhancement Group, said year-over-year inflation is likely to peak, but the pace at which higher prices come down remains uncertain.

“As long as inflation remains elevated and continues to come down very slowly, the Fed is going to increase interest rates in order to combat these high inflation rates,” Ms. Yoshioka said. “It’s a very difficult thing for the Fed to engineer a soft landing.”

On Tuesday, the Reserve Bank of Australia lifted its key policy rate by 0.5 percentage point, more than expected. 

“The Australian central bank’s move, it’s a reminder that central banks can surprise on the upside. What does this tell us about what the Fed will do, what the ECB will do?” Mr. Kamal said. “More aggressive tightening directly equals a higher probability of a recession.”

The yield on the benchmark 10-year Treasury note eased to 2.973% from 3.037% on Monday. Yields fall when prices rise. 

“With yields at 3%, it shows that the market hasn’t decided if we’re going to have a recession or if we have one, how severe it’s going to be,” said Julien Lafargue, chief market strategist at Barclays Private Bank. “That is what you would want to own if you expect a recession.”

Traders worked on the floor of the New York Stock Exchange on Friday.



Photo:

justin lane/Shutterstock

In other corporate news,

Kohl’s

shares jumped more than 9% after The Wall Street Journal reported the department-store chain is in exclusive talks to be sold to retail holding company

Franchise Group.

The deal may value the company at about $8 billion. 

Arcade company

Dave & Buster’s Entertainment

rose 2% after reporting a jump in sales growth.

Shares of BuzzFeed climbed 6%, recovering some ground after plunging 41% on Monday after a ban that prevented executives and major investors from selling shares was lifted.

Twitter

shares rose 1% after Elon Musk threatened Monday to end his acquisition of the social-media platform, saying the company didn’t comply with requests for data about spam accounts. 

Casey’s General Stores

is slated to report after markets close.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.3%. In Asia, major benchmarks were mixed. The Shanghai Composite Index added 0.2%, while Hong Kong’s Hang Seng Index declined 0.6%. Japan’s Nikkei 225 edged up 0.1%. 

The Japanese yen weakened 0.7%, reaching the lowest level against the dollar since April 2002. The yen has sold off this year as the

Bank of Japan

has remained committed to ultra-easy monetary policy, while many other central banks have begun lifting interest rates to combat rapid inflation. 

Cryptocurrencies fell, with bitcoin tumbling 4% and dropping below $30,000. Ether also declined 4%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Vicky Ge Huang at vicky.huang@wsj.com

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around. Illustration: Jacob Reynolds

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Business

Stock Market Rises After Weekly Loss

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U.S. stocks rose on Monday, at least temporarily changing direction after more than two months of volatility and losses.

The S&P 500 climbed 0.7% in morning trading, while the Dow Jones Industrial Average rose 0.4%. The technology-focused Nasdaq Composite Index was 0.8% higher. The three indexes fell Friday after data showed hiring growth slowed in May, though employers still added a strong 390,000 jobs.

Investors are still trying to balance the positive signs from the jobs report against more cautious recent economic commentary from executives like Tesla’s Elon Musk and JP Morgan’s Jamie Dimon, said AvaTrade chief market analyst

Naeem Aslam.

On top of the jobs market, investors are also watching economic data closely for clues about the Federal Reserve’s path for raising interest rates. Fears that the Fed could aggressively raise rates and potentially drive the economy into recession have stoked volatility in global markets this year. 

While traders and consumers alike are looking for signs that inflation has peaked, the real issue is when inflation will come down to a more neutral rate and how much the Fed and other central banks will have to raise interest rates to get it there, said

Siddharth Singahi,

chief investment officer at IronHold Capital.

A key test for markets will be Friday’s U.S. consumer-price index. The closely watched inflation gauge is expected to rise 8.2% in May from a year earlier, according to economists surveyed by The Wall Street Journal. Excluding food and energy, price growth is expected to cool slightly to an annual rate of 5.9% in May from 6.2% the previous month.

Fed officials have indicated they plan to raise interest rates by half a percentage point at next week’s policy meeting, and by the same amount again in July. If they need to do more, Mr. Singahi said, he believes they will, no matter the market reaction.

“Until that’s resolved, not much is going to change for the market fundamentally,” he said.

Trading has been quieter in recent weeks as investors gear up for coming central bank decisions and crucial economic data. The Dow industrials fell 0.9% last week, the smallest weekly change for that index in about a month. The S&P 500 lost 1.2% last week while the Nasdaq ended down 1%.

“We seem to be in a kind of wait-and-see mode,” said

Craig Erlam,

senior market analyst at Oanda in London. “We’ve entered a phase where a lot of interest-rate increases are priced in. A lot of growth slowdown is priced in. We are still seeing intraday volatility, but it does seem to have stabilized.”

Amid a record hiring streak in the U.S., economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates over high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

Shares of

Spirit Airlines

rose 6.1% after

JetBlue Airways

sweetened its offer to buy the company. JetBlue in May launched a hostile takeover of Spirit, which had already agreed to a merger with

Frontier Airlines.

Spirit’s shareholders are set to vote on the Frontier merger proposal on Friday. Shares of JetBlue rose 2%, while Frontier Group shares rose 2.6%.

Tesla

shares rose 1.3%, partially recovering from a 9.2% fall on Friday after Mr. Musk, its chief executive, said the electric vehicle maker would cut 10% of its salaried workforce, citing concerns about the global economy. Mr. Musk on Monday threatened to terminate his deal to buy

Twitter Inc.,

shares of which fell 3.7%.

Amazon.com

shares rose 2.9% to $127.12. Monday will mark the first day of trading since the company executed a 20-for-1 stock split. Before the split, Amazon shares were $2,447 a share.

Shares of

Keurig Dr Pepper

rose 4.4%, while

VICI Properties

rose 4.7% and

ON Semiconductor

rose 5.3% after S&P Dow Jones Indices said the three companies will join the benchmark S&P 500 index this month.

U.S. crude oil slid 0.3% to $118.45 a barrel. Prices for oil have surged this year as Russia’s war in Ukraine has disrupted global commodity markets. The average price of regular gas in the U.S. rose to $4.86 over the weekend, according to AAA.

In the bond market, the yield on 10-year U.S. Treasurys jumped to 3.028%, from 2.940% Friday, as investors sold government bonds. Yields and bond prices move inversely. Bond yields have been on the rise in recent weeks but remain below their recent high of 3.124% set in early May.

Traders worked on the floor of the New York Stock Exchange on Friday.



Photo:

BRENDAN MCDERMID/REUTERS

Overseas, the British pound rose 0.4% against the U.S. dollar to $1.2539 as Prime Minister

Boris Johnson

is set to face a vote of confidence in his leadership on Monday. Mr. Johnson’s poll ratings have fallen amid revelations that he held parties in Downing Street during Covid-19 lockdowns.

The U.K.’s FTSE 100 rose 1.4% after being closed since Wednesday due to the four-day Platinum Jubilee weekend, celebrating Queen Elizabeth II’s 70 years on the throne. 

The pan-continental Stoxx Europe 600 rose 1.2%. Investors in Europe will be watching the European Central Bank’s policy meeting on Thursday, where it is expected to lay out its plans for unwinding bond purchases and raising interest rates. The ECB is expected to raise rates for the first time in 11 years in July as it seeks to contain surging inflation.

Asian markets rallied as China continued to ease Covid-19 restrictions in major cities. China’s Shanghai Composite rose 1.3% while Hong Kong’s Hang Seng Index gained 2.7%. Japan’s Nikkei 225 rose 0.6%.

Write to Chelsey Dulaney at chelsey.dulaney@wsj.com and Paul Vigna at Paul.Vigna@wsj.com

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Business

U.S. Stocks Slide After Jobs Report

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U.S. stocks dropped Friday after the latest employment report showed the U.S. labor market added jobs at a strong but slower clip in May.

The S&P 500 slipped 1% in morning trading, while the Dow Jones Industrial Average fell 156 points, or 0.5%, and the Nasdaq Composite declined 1.7%. All three indexes are on track for weekly declines.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked up to 2.973% from 2.914% Thursday. Yields and prices move inversely. 

U.S. employers added 390,000 jobs last month, the slowest pace of growth since April of last year, while the unemployment rate remained 3.6%. Wages grew 5.2% on the year, down from 5.5% in April.

Economists surveyed by The Wall Street Journal expected employers added 328,000 jobs last month. And they saw the unemployment rate falling slightly to 3.5%, which would have matched a 53-year low and its level in February 2020 before the Covid-19 pandemic became widespread in the U.S.

Federal Reserve officials are closely monitoring the state of the labor market as they decide how much and how quickly to raise interest rates in the coming months. 

One point of concern for officials is that a strong labor market will add to elevated inflation as competition for workers boosts wage-bargaining power. Fed Vice Chairwoman

Lael Brainard

said Thursday that she supported plans to raise interest rates by a half-percentage point at a meeting later this month and again in July. 

Frank Øland, global chief strategist at Danske Bank, said ahead of the report that he would be looking to see whether wages grew last month. That—plus a slowdown in hiring—could cause markets to falter, he said. 

“That’s an unfortunate cocktail,” he said. “Then we have inflation getting more broad-based, and then the Fed will continue to tighten.”

Amid a record hiring streak in the U.S., economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates over high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

Shares of

Tesla

fell 7% after Reuters reported that Chief Executive

Elon Musk

is looking to cut staff at the electric-car maker. Mr. Musk earlier this week told employees to return to the office or seek employment elsewhere. 

Markets have experienced heightened volatility in recent months as investors have tried to assess a mix of variables that has clouded their outlook and added to fears of a recession.

In the past two weeks, though, some of the choppiness has eased. 

Justin Wiggs, managing director in equity trading at Stifel Nicolaus, said in the past week or so he has seen the number of buy orders among his clients ticking up, something he believes directly correlates with fewer big stock-market swings. 

Wall Street’s fear gauge, the Cboe Volatility Index, is trading in the mid-20s again, and the VVIX, a measure of how volatile the VIX itself is, is trading at its lowest level in two years. The VVIX is based on options prices on the volatility index.

“That the swings are getting less bad has given some people solace in the idea that maybe they can put money back to work,” said Mr. Wiggs.

A tightening of financial conditions by the Fed might damp inflation but also risks weighing on growth and the housing market. Russia’s war against Ukraine and China’s zero-Covid policy have added to supply-chain disruptions, further stoking inflation.

Oil prices also remain above $100 a barrel, adding to the cost of energy and fuel. Futures for Brent crude, the global oil benchmark, edged up 0.4% to $118.08 a barrel. 

“You have a really strong U.S. economy now but we have this really high inflation not coming down,” Mr. Øland said. “Eventually that will bring consumers to a point where they might say let’s look at our budget and maybe tighten a bit here and there. If everyone holds back a bit, you’re moving toward recession.”

Overseas, the pan-continental Stoxx Europe 600 was roughly flat. Markets in the U.K., Hong Kong and China were closed for holidays. Japan’s Nikkei 225 closed 1.3% higher, while South Korea’s Kospi added 0.4%.

Traders working on the floor of the New York Stock Exchange.



Photo:

Michael Nagle/Bloomberg News

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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Business

Stocks Pull Back After Last Week’s Rally

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U.S. stocks fell on Tuesday, poised to end the month on a downbeat note after last week’s rally.

The S&P 500 was down 0.4% in afternoon trading, a day after U.S. markets were closed for Memorial Day. After snapping a seven-week losing streak last week, the benchmark index regained ground and was on track to close the month with a slight gain. The Dow Jones Industrial Average shed 0.5%, while the Nasdaq Composite fell 0.1%.

Tuesday’s session will cap another volatile trading month, during which stocks around the world swung wildly as traders tried to assess the outlook for global economies. In the U.S., stocks tumbled shortly after May began and continued falling amid a slew of earnings and economic data that came in worse than expected. 

Throughout the month, profit warnings from companies ranging from

Snap

to

Target

intensified worries about the lingering impact of inflation, and spurred investors to dump shares across several industries.

By mid-May, it seemed the S&P 500 was bound to close in a bear market, defined as a drop of 20% or more from a recent high, before a late-month rally sent stocks higher. The S&P 500 is down about 14% from its January high. 

Professional and individual investors alike waded into last week’s rally in the U.S. markets, finding opportunities to scoop up stocks that have seen their valuations fall. However, the issues that sent stocks declining earlier this month have yet to abate.

Many traders remain worried that the Federal Reserve’s plans to raise interest rates aggressively could tip the U.S. economy into a recession. Meanwhile, concerns about an economic slowdown in China and sustained supply-chain disruptions due to the pandemic and the war in Ukraine have continued to weigh on investors’ minds.

“There’s a bit of market uncertainty just about the pretty rapid rally we’ve had, and whether that can be sustained in a world where inflation is clearly still a factor,” said Brooks Macdonald Chief Investment Officer Edward Park.

European Union leaders took a big step in the economic fight against Moscow over its invasion of Ukraine by agreeing to block 90% of Russian oil imports by year-end. The embargo faced opposition from countries highly dependent on Russian crude, especially Hungary. Photo: Olivier Matthys/Associated Press

New survey data released Tuesday showed U.S. consumer confidence declined slightly in May from the previous months.

Crude prices jumped after European Union leaders said they would impose an oil embargo on Russia over its invasion of Ukraine, but later pared their gains. The sanctions are set to include a ban on insuring ships that carry Russian oil, The Wall Street Journal reported. They would include an exemption for oil delivered from Russia via pipelines, which make up one-third of EU oil purchases from Russia.

Front-month futures for Brent crude, the global benchmark, rose 1% to settle at $122.84 a barrel. West Texas Intermediate, the U.S. marker, slipped 0.3% to $114.67 a barrel.

Nine of the S&P 500’s 11 sectors were down on Tuesday. Consumer-discretionary stocks were the best-performing sector, lifted by a 3.8% rise in the shares of online-commerce giant

Amazon.com.

U.S.-traded shares of

Unilever

surged 9.9% after the consumer-goods company said it would add activist investor Nelson Peltz to its board and disclosed his fund now holds a 1.5% stake.

The S&P 500’s energy sector is on track to finish May with the largest gain among the benchmark index’s 11 groups, extending a trend that has flourished for much of 2022. But even some beaten-down stocks are set to end the month in the green, such as

Netflix,

Robinhood Markets

and

Zoom Video Communications.

“When the S&P 500 is [close to entering] a bear market, that has a big psychological impact on those seeking value,” said

Craig Erlam,

senior market analyst at Oanda. “I think the question repeatedly being asked is, ‘Are we seeing a bottom in the markets?’”

In the bond market, the yield on 10-year Treasury notes rose to 2.842% from 2.748% Friday. Bond yields and prices move in opposite directions.

Bitcoin was trading at about $31,664, according to CoinDesk, rising 1.2% from its price at 5 p.m. ET on Monday.

Overseas, the pan-continental Stoxx Europe 600 fell 0.7%, snapping a four-session winning streak, after eurozone inflation rose faster than expected. Consumer prices rose 8.1% on the year in May—the fastest past since records began in 1997—after climbing at a 7.4% rate in April. The inflation report will likely factor into the European Central Bank’s coming interest-rate decisions. Earlier this month, ECB President

Christine Lagarde

indicated that the central bank could increase its key interest rate in July for the first time in 11 years.

Traders worked on the floor of the New York Stock Exchange on Friday.



Photo:

Courtney Crow/Zuma Press

In Asia, the Shanghai Composite Index rose 1.2% after the city’s government said a two-month lockdown would be lifted Wednesday. The shutdown, designed to limit Covid-19 transmission, had slowed the Chinese economy and added to inflationary pressures elsewhere in the world by gumming up supply chains.

Hong Kong’s Hang Seng rose 1.4%. Japan’s Nikkei 225 fell 0.3%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com, Joe Wallace at joe.wallace@wsj.com and Alexander Osipovich at alexander.osipovich@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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World

Stocks Waver After Paring Morning Losses

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U.S. stocks edged lower on Tuesday, resuming their recent downward trajectory after last week’s rally.

The S&P 500 dropped less than 0.1% in midday trading, paring losses a day after U.S. markets were closed for Memorial Day. After snapping a seven-week losing streak last week, the benchmark index has regained some ground and is on track for a slight loss this month. The Dow Jones Industrial Average shed 0.1%, while the Nasdaq Composite rose 0.3%.

Crude prices initially jumped after EU leaders said that they would impose an oil embargo on Russia over its invasion of Ukraine, but later pared their gains. The sanctions are set to include a ban on insuring ships that carry Russian oil, The Wall Street Journal reported. They would include an exemption for oil delivered from Russia via pipelines, which make up one-third of EU oil purchases from Russia, limiting some of their market impact.

Futures for Brent crude, the global benchmark, were recently up 0.5% to $118.22 a barrel. West Texas Intermediate, the U.S. marker, rose 2% to $117.38 a barrel, playing catch-up after the market was closed Monday.

Tuesday’s session will cap another volatile trading month, during which stocks around the world swung wildly as traders tried to assess the outlook for global economies. In the U.S., stocks tumbled shortly after the month began and continued falling amid a slew of earnings and economic data that came in worse than expected. 

Throughout the month, profit warnings from companies ranging from

Snap

to

Target

intensified worries about the lingering impact of inflation, and spurred investors to dump shares across several industries.

By mid-May, it seemed the S&P 500 was bound to close in a bear market, defined as a drop of 20% or more from a recent high, before a late-month rally sent stocks racing higher. The S&P 500 is down about 14% from its January high. 

Professional and individual investors alike waded into last week’s rally in the U.S. markets, finding opportunities to scoop up stocks that have seen their valuations fall. However, the issues that sent stocks falling earlier this month have yet to abate.

Many traders remain worried that the Federal Reserve’s plans to raise interest rates aggressively could tip the U.S. economy into a recession. Meanwhile, concerns about an economic slowdown in China and sustained supply-chain disruptions due to the pandemic and the war in Ukraine have continued to weigh on investors’ minds.

“There’s a bit of market uncertainty just about the pretty rapid rally we’ve had,” said Brooks Macdonald Chief Investment Officer

Edward Park,

“and whether that can be sustained in a world where inflation is clearly still a factor.”

European Union leaders took a big step in the economic fight against Moscow over its invasion of Ukraine by agreeing to block 90% of Russian oil imports by year-end. The embargo faced opposition from countries highly dependent on Russian crude, especially Hungary. Photo: Olivier Matthys/Associated Press

New survey data released Tuesday showed U.S. consumer confidence declined slightly in May from the previous months. President Biden is also expected to meet with Fed Chairman

Jerome Powell

Tuesday at the White House. 

Nine of the S&P 500’s 11 sectors were down on Tuesday. The best-performing sector was energy, which rose on the back of climbing oil prices.

Marathon Oil,

Diamondback Energy

and Hess all advanced more than 1%.

U.S.-traded shares of

Unilever

jumped 9.8% after the consumer-goods company said it would add activist investor Nelson Peltz to its board and disclosed his fund now holds a 1.5% stake.

The S&P 500’s energy sector is on track to finish May with the largest gain among the benchmark index’s 11 groups, extending a trend that has flourished for much of 2022. But even some beaten-down stocks are set to end the month in the green, such as Netflix, Robinhood Markets and Zoom Video Communications. 

“When the S&P 500 is [close to entering] a bear market, that has a big psychological impact on those seeking value,” said

Craig Erlam,

senior market analyst at Oanda. “I think the question repeatedly being asked is, ‘Are we seeing a bottom in the markets?’”

In the bond market, the yield on 10-year Treasury notes rose to 2.868% from 2.748% Friday. Bond yields and prices move in opposite directions.

Overseas, the pan-continental Stoxx Europe 600 fell 0.8%, putting it on track to snap a four-session winning streak, after eurozone inflation rose faster than expected. Consumer prices rose 8.1% on the year in May—the fastest past since records began in 1997—after climbing at a 7.4% rate in April. The inflation report will likely factor into the European Central Bank’s coming interest-rate decisions. Earlier this month, ECB President

Christine Lagarde

indicated that the central bank could increase its key interest rate in July for the first time in 11 years.

Traders worked on the floor of the New York Stock Exchange on Friday.



Photo:

Courtney Crow/Zuma Press

In Asia, the Shanghai Composite Index rose 1.2% after the city’s government said a two-month lockdown would be lifted Wednesday. The shutdown, designed to limit Covid-19 transmission, had slowed the Chinese economy and added to inflationary pressures elsewhere in the world by gumming up supply chains.

Hong Kong’s Hang Seng rose 1.4%. Japan’s Nikkei 225 fell 0.3%.

—Alexander Osipovich contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Joe Wallace at joe.wallace@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Global Stocks Rise as China Signals Stimulus for Shanghai

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International stocks rose Monday, extending a rally that has pared some of this year’s losses, while U.S. markets were closed for the Memorial Day holiday.

The Stoxx Europe 600 added 0.6%, led by shares of technology and luxury-goods firms. Germany’s DAX gained 0.8% and London’s FTSE 100 edged up 0.2%.

Global markets were boosted by the looming relaxation of some Covid-19 curbs in China. Shanghai’s Vice Mayor Wu Qing said over the weekend that authorities will loosen the conditions under which companies are able to resume work this week, and the city’s government laid out a 50-point plan for accelerating the economic recovery. The measures include tax cuts for businesses and subsidies for purchases of electric vehicles, the official Xinhua News Agency said.

Futures for the S&P 500 gained 0.6% by noon ET. The U.S. stock market is due to reopen Tuesday, as is the Treasury market. Yields on government bonds retreated from their 2022 highs in the run-up to Friday’s close, helping lift stocks after a weekslong drubbing. The S&P 500 snapped a seven-week losing streak Friday and posted its biggest weekly gain since November.

Still, some money managers caution that the pickup in stocks and bond prices may be a short-lived blip in a longer-running retreat. They say most of the factors that have contributed to this year’s losses—the war in Ukraine, higher interest rates set by the Federal Reserve and a slowing economy—are still in place.

“We are about to see a bear-market rally—or are in the midst of it,” said Daniel Egger, chief investment officer at St. Gotthard Fund Management.

Mr. Egger said yields will begin to rise again and that forecasts for corporate earnings are too high, while profit margins are under pressure from high commodity prices. “This doesn’t bode well for stocks,” he said.

On the economic front, data showed inflation accelerating in major European economies. Germany’s annual inflation rate hit 8.7% this month, according to preliminary figures, the quickest pace since 1973. In Spain, consumer prices rose 8.5% on the year, up from the 8.3% rate recorded in April.

Shares of European luxury-goods companies that have tapped into Chinese demand benefited from the prospect of lighter-touch lockdowns.

Hermès International

gained 3.9% and

Compagnie Financière Richemont

rose 2.9%.

L’Oréal,

the French personal-care company, gained 2.1% and

LVMH Moët Hennessy Louis Vuitton

added 2.6%.

In commodity markets, benchmark Brent-crude futures rose 1.2% to $116.90 a barrel and touched their highest level in more than two months. Leaders of European Union members are due to meet Monday and Tuesday, after diplomats over the weekend failed to strike a deal on sanctions that would limit imports of Russian oil.

Global stock markets were broadly higher on Monday.



Photo:

peter parks/Agence France-Presse/Getty Images

In Asia, the Shanghai Composite Index added 0.6% and Hong Kong’s Hang Seng jumped 2.1%.

In China, companies that serve Chinese consumers registered some of the largest advances. Hot-pot restaurant chain

Haidilao International Holding Ltd.

, brewer

China Resources Beer

(Holdings) Co. and sportswear company

Li Ning Co. Ltd.

, surged between 8.2% and 11% in Hong Kong. 

Chinese internet stocks built on a rally from late last week, as the Hang Seng Tech Index rose 3.9%. The food-delivery giant

Meituan

jumped 6.8%. Chinese e-commerce platform

Pinduoduo Inc.

, whose stock trades in the U.S., on Friday reported better-than-expected quarterly profit and revenue, after similarly strong results from

Alibaba Group Holding Ltd.

and

Baidu Inc.

Investors are hopeful that China is past the worst of its Covid-19 wave in terms of lockdown severity and case numbers, said

Michael Metcalfe,

head of macro strategy at State Street Global Markets. That would lessen one of the forces pushing the world economy into a period of low growth and high inflation, he said.

Nonetheless, Mr. Metcalfe said, inflation remains elevated in both Europe and the U.S., maintaining the pressure on central banks to raise interest rates. “There’s nothing that we see in the current inflation trend that gives us any confidence,” he said.

Write to Joe Wallace at joe.wallace@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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