Wall Street mixed amid inflation fears; Powell-Biden talks in focus

Energy outperformed with a 1.1% gain as Brent crude climbed above $120 a barrel

US stocks traded mixed on Tuesday as soaring oil prices and hawkish comments from a Federal Reserve official spooked investors, with focus on talks between U.S. President Joe Biden and Fed Chair Jerome Powell later in the day.

Seven of the 11 major S&P 500 sectors declined.

Communication services and energy stocks outperformed, both rising 1.2%, with the latter tracking Brent crude that rose above $120 a barrel after the European Union agreed to a partial ban on Russian oil.

Fed Governor Christopher Waller said on Monday the U.S. central bank should be prepared to raise rates by a half percentage point at every meeting from now on until inflation is decisively curbed.

Waller's comments sparked a sell-off in bond markets, with the benchmark 10-year U.S. Treasury yield climbing to a one-week high, as traders scaled down expectations that the Fed might pause for breath after hikes in June and July.

"The market is on very high alert for anything Fed officials say before the meetings and is digesting several mixed signals from the economy," said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

"Until the picture is clearer, this market is going to have a strong bias to high volatility."

The meeting between U.S. President Joe Biden and Fed Chair Powell is scheduled at 1:15 p.m. (1715 GMT).

Data on Tuesday showed U.S. consumer confidence eased modestly in May amid persistently high inflation and rising rates, while a separate reading showed U.S. home price growth unexpectedly heated up to record levels in March.

Market participants are now awaiting readings on ISM manufacturing and non-manufacturing data and factory orders to assess the health of the economy, as well as non-farm payrolls data for cues on the labor market.

At 12:35 p.m. ET, the Dow Jones Industrial Average was down 91.62 points, or 0.28%, at 33,121.34, the S&P 500 was down 5.76 points, or 0.14%, at 4,152.48.

The Nasdaq Composite was up 21.32 points, or 0.18%, at 12,152.45, led by gains in shares of Amazon.com and Alphabet Inc.

Boosted by a sharp rally last week, the S&P 500 and the Dow were up 0.4% for the month. The tech-heavy Nasdaq was down 1.4% and likely to fall for a second straight month as high-growth stocks tend to underperform when interest rates rise.

U.S.-listed shares of Yamana Gold Inc climbed 5.6% after South African miner Gold Fields Ltd agreed to buy the Canadian miner in a $6.7 billion all-share deal.

Dexcom Inc jumped 5.8% after the glucose monitoring systems maker denied a report on merger talks with insulin pump maker Insulet Corp.

The CBOE volatility index snapped a three-day losing streak and was last up at 26.28 points.

Declining issues outnumbered advancers for a 1.83-to-1 ratio on the NYSE and for a 1.37-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 29 new lows, while the Nasdaq posted 43 new highs and 37 new lows.