US stocks had bounced lower in afternoon trading after a choppy session on Tuesday, before rallying late on to close in the green as investors await the US Federal Reserve’s monetary policy commentary on Wednesday. This marks the second day of gains for US stocks in May, after Monday’s upside following a brutal April.
The S&P 500 closed 0.48% up, the Dow Jones Industrial Average added 0.2% while Nasdaq edged 0.22%, with the tech-heavy index stretching into the green despite minor losses for Amazon Inc and Microsoft Corp stocks.
Across the S&P sectors, most sectors edged higher. Energy was up 2.9%, financials had added 1.27% while industrials and materials were +0.7% and +1.2% respectively. Technology stocks were also slightly higher at +0.2%. On the losing end, consumer discretionary and consumer staples were down 0.29% and 0.24% respectively.
Billionaire investor Paul Tudor Jones on stocks
Investors expect Fed to announce a 50 basis points interest rate hike on Wednesday, while the spotlight is also on earnings and developments on the geopolitical front.
Earlier in the day, billionaire investor Paul Tudor Jones had noted that the current market environment does not look good for investors, with higher rates portending further pain for financial assets.
“You can’t think of a worse environment than where we are right now for financial assets,” the hedge fund manager told CNBC’s ‘Squawk Box’.
According to the investor, this is not the time to own bonds and stocks.
Top investor warns of more pain for S&P 500
April was the worst month for stocks since March 2020, with the S&P 500 slumping to an 8.8% dump over the month. The picture was even worse for the Nasdaq, which slumped more than 13% for its worst monthly performance since 2008.
Dan Suzuki, a money manager at Richard Bernstein Advisors also suggests stocks are set to see further selling pressure. In an interview with CNBC’s Fast Money on Monday, the investor warned of a potential 50% correction downside, he noted.
He said sectors likely to contribute to the fresh rot include information technology, consumer discretionary and communication services. These sectors, he explained, account for nearly 50% of the S&P 500 market cap.
On the other hand, stocks that are likely to ride inflationary pressures include energy, materials, and financials. But if Fed’s tightening further slows down the economy, the investor suggests investors might look at defensive stocks.
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