S&P 500 down 2% on inflation concerns, oil prices up

The S&P 500 was down 2% on Tuesday after a report showing US consumer confidence fell in June amid concerns about inflation, while oil prices went up for a third day.

While Western governments agreed to look for ways to cap Russian oil prices, major oil producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to lift output much while helping oil, major oil producers and the United Arab Emirates looked unlikely to be able to lift output.

The Conference Board said Tuesday US consumer confidence fell sharply in June due to concerns about high inflation, which left consumers anticipating that economic growth would weaken significantly in the second half of the year.

An aggressive interest rate hike cycle by the US Federal Reserve to tame inflation could cause the economy to go into a recession, according to investors.

All three major indexes ended well down on Wall Street, with every S&P 500 sector losing ground aside from energy.

Earlier in the session, news that China relaxed COVID 19 quarantine rules helped lift stocks as investors hoped for a revival in global growth.

Tim Ghriskey, senior portfolio strategist at Ingalls Snyder in New York, said it doesn't take much negativity to cause profit-taking.

At some point, aggressive selling is going to dissipate, but it doesn't seem like it's going to be anytime soon, he said.

The Dow Jones Industrial Average fell by 491.27 points, or 1.56%, to 30,946. The S&P 500 lost 78.56 points, or 2.01%, to 3,821. 55 and the Nasdaq Composite dropped 343.01 points, or 2.98%, to 11,181. The pan-European STOXX 600 index rose 0.27% and the MSCI's gauge of stocks shed 1.28%.

China has slashed the quarantine time for inbound travellers by half in a major easing of one of the world's strictest COVID 19 curbs, which have deterred cross-border travel and resulted in international flights running at just 2% of pre-pandemic levels.

Brent crude LCOc 1 futures went up $2.89, or 2.5%, to settle at $117.58 a barrel, while US West Texas Intermediate crude CLc 1 rose $2.19, or 2%, to $111.76.

The euro was weakened in foreign exchange after European Central Bank President Christine Lagarde offered no fresh insight into the central bank's policy outlook.

The dollar index went up 0.519%, with the euro down 0.61% to $1.0518.

The consumer confidence report gave the US Treasury yields flat.

The yield on 10 year Treasury notes fell by 0.2 basis points to 3.192%.

A closely watched part of the Treasury yield curve measuring the gap between yields on two and 10 year notes, a sign of economic expectations, was at 6.6 basis points. The gap was briefly narrowed down to - 7.24 when New York trade opened.