By STAN CHOE – AP Business Writer
NEW YORK (AP) — U.S. stocks tumble Tuesday as Wall Street nears the end of a tumultuous month, battered by worries about a possible recession, inflation and rising interest rates.
The S&P 500 was down 1.1% in early trading. The Dow Jones Industrial Average was down 421 points, or 1.3%, at 32,791 as of 9:49 a.m. EST, and the Nasdaq composite was down 1%.
Underscoring inflation concerns, oil prices jumped above $119 to their highest levels since the early days of Russia’s war in Ukraine.
Brent crude, the international standard, rose 2% to $119.95 a barrel after the European Union agreed to block the majority of oil imports From Russia. Benchmark U.S. crude rose 3.2% to $118.76.
Jumps of almost 60% in oil prices so far this year have largely contributed to very high inflation around the world. Earlier Tuesday morning, a report showed inflation in the 19 countries that use the euro the currency hit 8.1% in May, the highest level since records began in 1997.
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In the United States, President Joe Biden will meet Federal Reserve Chairman Jerome Powell on Tuesday as soaring inflation continues to eat away at Americans’ incomes.
Tuesday’s meeting will be the first since Biden reappointed Powell as head of the central bank and weeks after the Senate confirmed a second term. The White House said the couple would discuss the state of the US and global economy and in particular the four-decade high inflation, described as Biden’s “top economic priority”.
The S&P 500 is on track for a 0.5% loss in May, which would take it 14.3% below its record high set earlier this year. But the month’s slight movement belies the big swings that have rattled investors along the way.
For the first time since the dot-com bubble burst two decades ago, the S&P 500 fell seven straight weeks through mid-May. Softening data on the U.S. economy has heightened fears that high inflation will force the Federal Reserve to raise interest rates so aggressively that it will trigger a recession.
Some top retailers also said inflation was eating away at their profits, adding more urgency to concerns. They all combined to bring Wall Street to the brink of what’s called a bear market, where the S&P 500 was poised to close more than 20% below its all-time high.
But stocks have bounced back a bit from there and managed to avoid a bear market, at least so far. The S&P 500 just had its best week in a year and a half, partly on hopes that inflation has peaked and is starting to moderate. The easing of anti-COVID restrictions in China has also helped, alleviating some of the worries about the world’s second-largest economy and more problems with global supply chains.
Chinese factory activity contracted again in May, but it is almost back to growth. More factories, stores and other businesses are cleared to reopen this week in Shanghai and the Chinese capital, Beijing, after authorities declared the outbreaks under control.
AP Business Writer Elaine Kurtenbach contributed.
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