Stocks End Mixed After Last Week’s Rally With Inflation In Focus
3:30 pm Tuesday, May 31st, 2022
The S&P 500 fell slightly on Tuesday after a three-session rally as volatile trading in oil prices kept soaring inflation in focus and investors reacted to hawkish comments from a Federal Reserve official.
Some might gripe that the indices aren’t doing much, but doing little after last week’s huge gains is still a plus for investor sentiment. To that end, the market is not meekly giving into an inclination to sell into strength like it has done all year.
Yes, there was some selling into strength at the open, but more importantly, there was a renewed bid to buy into that weakness. The mega-cap stocks have been beneficiaries of that move, which has helped greatly at the overall index level.
Their outperformance shows up in the Vanguard Mega-Cap Growth ETF (MGK), which is up 0.6%. The real tell, however, is that the market-cap weighted S&P 500 Index is flat, whereas the Invesco S&P 500 Equal Weight ETF (RSP) is down 0.5%.
The strength in the mega-cap stocks has afforded the consumer discretionary (+1.2%), communication services (+1.3%), and information technology (+0.1%) sectors with a clear measure of relative strength in a market that has been devoid of market-moving corporate news. The energy sector (+1.2%) is another standout thanks to the jump in oil prices.
Today’s narrative has been dictated predominately by macro considerations, such as the aforementioned oil news, Fed Governor Waller’s (FOMC) view that he would support a policy rate above the neutral rate by the end of the year, Shanghai engaging in more reopening efforts, and a stronger-than-expected Consumer Confidence Index for May that also happened to be weaker than the reading registered for April.
