Stocks retreated after weak economic data, with traders awaiting more clarity on the Federal Reserve’s monetary policy path from the annual central bankers’ symposium later this week.

The S&P 500 saw its third straight drop after swinging between gains and losses throughout the session. Trading volume was among the lowest in 2022. Treasury 10-year yields topped 3 per cent, while the dollar halted a four-day rally.

Traders are bracing for hawkish talk at the Jackson Hole event after recent comments from officials convinced many investors the Fed will continue to tighten even with a slowing economy. Data Tuesday showed sales of new US homes fell for the sixth time this year to the slowest pace since early 2016, while business activity contracted for a second straight month.

“For the moment, global sentiment is both skittish and volatile,” said Richard Hunter, head of markets at Interactive Investor. “There is little cause for optimism on the immediate horizon, with any glimmers of economic hope yet to take hold on a sustainable basis.”

Directors at two of the Fed’s 12 regional branches -- St. Louis and Minneapolis -- favored a 100 basis-point increase in the discount rate in July, signaling internal pressure for a bigger move than policy makers delivered last month.

Citigroup Inc.’s Beata Manthey said the recent rally in stocks had gone too far given the prospect of sticky inflation and the need for further interest-rate rises to tame it. While the strategist said she’s still bullish on equities over the longer term, she added that markets don’t go up in a straight line.

Quantitative tightening by the US central bank is set to kick into gear next month, presenting another potential headwind for equities.

“The near-term outlook for equity markets remains challenging,” said Mathieu Racheter, head of equity strategy at Julius Baer. “The impact of quantitative tightening on financial markets have yet to be felt, while the earnings downgrade cycle has just started.”

In corporate news, Zoom Video Communications Inc. plummeted after its results showed that the transition from an essential Covid-era tool to an enterprise business platform is going to take longer than expected. Macy’s Inc. climbed after cutting its forecasts for profit and revenue in what Citigroup called a “prudent” move.

Elsewhere, US natural gas prices tumbled as the operators of a key export terminal damaged in an explosion earlier this year announced a delay to the timeline for restart. West Texas Intermediate settled above US$93 a barrel as the dollar weakened, making commodities priced in the currency more attractive.

What to watch this week:

• US durable goods, MBA mortgage applications, pending home sales, Wednesday
• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.2 per cent as of 4 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average fell 0.5 per cent
• The MSCI World index fell 0.3 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.4 per cent
• The euro rose 0.3 per cent to US$0.9969
• The British pound rose 0.5 per cent to US$1.1829
• The Japanese yen rose 0.5 per cent to 136.81 per dollar

Bonds

• The yield on 10-year Treasuries advanced five basis points to 3.06 per cent
• Germany’s 10-year yield advanced one basis point to 1.32 per cent
• Britain’s 10-year yield advanced six basis points to 2.58 per cent

Commodities

• West Texas Intermediate crude rose 3.7 per cent to US$93.66 a barrel
• Gold futures rose 0.7 per cent to US$1,760 an ounce