US Stocks Drift as Tech, Oil Pare Back Gains: Markets Wrap - Yahoo Finance

(Bloomberg) -- The S&P 500 dropped to session lows as Apple Inc. erased earlier gains in anticipation of a new mixed reality headset.

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Both tech and energy stocks pared earlier advances that had briefly pushed the S&P 500 20% above an October low, the marker of a bull market.

The S&P 500 fell 0.3% in subdued trading. Meanwhile, Treasury yields drifted on a report the US services sector nearly stagnated in May.

The Institute for Supply Management’s overall gauge of services unexpectedly fell to the lowest level of the year, offering a less upbeat assessment of the US economy.

There’s increasing speculation the Federal Reserve will keep interest rates steady in June, and keep its options open for hikes later on.

“The weakness in the ISM surveys stands in contrast to the recent improvement in the S&P Global PMIs — which are currently consistent with positive GDP growth of about 2% annualised — and is clearly painting a dramatically different picture to May’s employment report,” said Andrew Hunter, deputy chief US economist at Capital Economics.

Taken with regional Fed activity surveys and other hard data, it could mean GDP growth will be barely above zero in the second quarter, Hunter said.

A rally in Big Tech and optimism of a Fed pause in rate hike has driven gains in the S&P 500. However, risks still loom in the market.

Saira Malik, chief investment officer at Nuveen, said she foresees a mild US recession sometime in 2024 as the “growth-dampening effects of tight monetary policy work their way through the economy.”

“With high inflation likely to persist, we think investors would be well-served by allocating to real assets that can provide meaningful inflation protection,” she said, pointing to farmland.

In other news, Bitcoin fell after Binance Holdings Ltd. and its chief executive officer were accused of breaking US securities rules. Safran SA is in talks to acquire an arm of Raytheon Technologies Corp. in a transaction that could value the business at about $1 billion. And US regulators revoked emergency authorization for Johnson & Johnson’s Covid-19 vaccine after the company’s Janssen unit requested its withdrawal.

Elsewhere, equities in Europe slid and indexes in Asia were mostly higher. The Nikkei 225 rose 2.2% to the highest since 1990 as investors bet a weak yen will boost corporate profits. The dollar erased gains against peers. And gold gained.

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