S&P 500
Markets were mixed on Tuesday, a day after the S&P 500 suffered its sharpest daily decline in over two months.
The benchmark index was slightly higher soon after the start of trading but ended the day down 0.2 percent, following a 2.1 percent drop on Monday as investors recalibrated their expectations for the Federal Reserve’s interest rate policy, which underpins conditions for households, businesses and governments around the world.
Europe’s Stoxx 600 Index fell nearly 0.5 percent, extending a 1 percent decline on Monday. Stock indexes in Japan, Taiwan, Australia, New Zealand, South Korea and the Philippines fell nearly 1 percent or more. Shares in Hong Kong and China were also lower on Tuesday.
The trading suggested that investors have, for now, retreated from expectations that recent data showing an easing of inflation in the United States would allow the Fed to be less aggressive in increasing interest rates. That change in sentiment comes on top of worries about the health of the global economy.
“The prudent thing to do is to take risk off and wait and watch,” said Chetan Seth, the Asia-Pacific equity strategist at Nomura, referring to this week’s gathering of central bankers in Jackson Hole, Wyo. Jerome H. Powell, the Fed chair, is scheduled to give a speech there on Friday, and investors will look for clues about whether the Fed will make another three-quarter-point increase in rates at its September meeting or opt for a half-point increase.
But Mr. Powell is unlikely to give hints about the Fed’s specific plans for next month, Mr. Seth said. Fed officials, he added, will wait to study jobs and inflation data due in the coming weeks before making a decision on the scale of the rate increase. Traders in futures markets now narrowly expect a three-quarter-point increase in rates next month.
On Tuesday, a survey of business activity in the eurozone by S&P Global showed a second month of contraction. Lower demand and weaker confidence “meant that firms were increasingly reticent to expand staffing levels and the rate of job creation softened to the slowest in almost a year and a half,” S&P Global said.
The euro extended Monday’s steep decline against the dollar, remaining just below parity, or a one-for-one exchange with the U.S. currency. European natural gas prices were down somewhat, but remained near the record high set the day before, after a 13 percent rise amid fears that Russia would further restrict oil and gas flows to western Europe.
“We expect further disruption to gas supplies to year-end which will keep energy prices high and weigh particularly hard on the manufacturing sector, which is likely to be subject to energy rationing over the coming months, leading some firms to close down temporarily,” Melanie Debono, the senior Europe economist at Pantheon Macroeconomics, wrote in a research note.
Oil remained an outlier, with prices rising after a Saudi Arabian official hinted about a production cut. The price of West Texas Intermediate crude oil rose 3.6 percent to above $93 a gallon.
Isabella Simonetti contributed reporting.
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