U.S. equities started the month off with modest losses following a turbulent May for markets that was marked by debate over how much monetary policy tightening may be needed to fight inflation. 

The S&P 500 fell 0.5%, led lower by real estate shares, a day after the benchmark index ended last month about where it started. The yield on 10-year Treasury spiked higher as traders raised bets on Federal Reserve interest-rate hikes. Meanwhile, oil rose ahead of an OPEC+ meeting to discuss supply policy.

Concerns that central-bank rate hikes may induce a recession are keeping investors guessing about the outlook for the economy as rising food and energy costs weigh on consumers, and volatility has picked up. The S&P 500 is down about 15% from a high in January.

“We now find ourselves in a little bit more no man’s land,” Greg Boutle, U.S. head of equity and derivative strategy at BNP Paribas, said in Bloomberg TV. “We are in this kind of a bear market environment yet we haven’t seen recession manifest in a macro data yet. So we still think there is a path for the U.S. economy to have a soft rather than a hard landing.”

Citigroup Inc. strategists said that after a difficult first five months of 2022, the pain may not be over yet for global equity markets. The prospect of downward revisions to earnings estimates is the latest headwind to face stock investors, already rattled by runaway inflation and the potential impact of central-bank tightening aimed at controlling it, the strategists led by Jamie Fahy wrote in a note.

Among individual stock moves, Salesforce Inc. climbed after the cloud-based customer management software company raised its annual profit forecast. ChargePoint Holdings Inc. slipped as analysts noted that the EV charging network firm’s margins came under pressure due to rising costs and supply-chain disruption. And Delta Air Lines Inc. fell after raising its revenue outlook but warned it likely won’t grow capacity through the year’s end.

Europe’s Stoxx 600 Index extended declines in the wake of euro-zone figures Tuesday that showed a record jump in consumer prices, strengthening the case for the European Central Bank to lift interest rates. Meanwhile, in the U.S., Treasury Secretary Janet Yellen gave her most direct admission yet that she made an incorrect call last year in predicting that elevated inflation wouldn’t pose a continuing problem.

“There are heightened concerns around inflation and where central banks are likely to go trying to combat inflation,” Kristina Hooper, Invesco Advisers chief global markets strategist, said on Bloomberg Radio. “This has gone from just an inflation scare to a growth scare. Uncertainty has grown.”

Here are some key events to watch this week:

• The Federal Reserve is set to start shrinking its $8.9 trillion balance sheet Wednesday.
• The Fed releases its Beige Book report on regional economic conditions Wednesday.
• New York Fed President John Williams, St. Louis Fed President James Bullard speak at separate events Wednesday.
• OPEC+ virtual meeting Wednesday.
• Cleveland Fed President Loretta Mester discusses the economic outlook Thursday.
• U.S. May employment report Friday.
• The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday.

Some of the main moves in markets:

• The S&P 500 fell 0.5% as of 10:19 a.m. New York time.
• The Nasdaq 100 was little changed.
• The Dow Jones Industrial Average fell 0.5%.
• The Stoxx Europe 600 fell 0.5%.
• The MSCI World index fell 0.5%.

• The Bloomberg Dollar Spot Index rose 0.5%.
• The euro fell 0.7% to $1.0664.
• The British pound fell 0.8% to $1.2506.
• The Japanese yen fell 0.9% to 129.86 per dollar.

• The yield on 10-year Treasuries advanced seven basis points to 2.91%.
• Germany’s 10-year yield advanced four basis points to 1.16%.
• Britain’s 10-year yield advanced three basis points to 2.14%.

• West Texas Intermediate crude rose 1.6% to $116.48 a barrel.
• Gold futures fell 0.3% to $1,842.30 an ounce.

This article was provided by Bloomberg News.