The S&P 500 fell 0.6% early Thursday and the Dow Jones Industrial Average fell 0.5%. The Nasdaq Composite technology index also fell 0.5%. Earlier, the main indicators opened lower before becoming positive for a while. For much of this year, investors have been placing their portfolios to account for the end of easy money conditions in the US. But now traders need to consider a tougher policy in the eurozone as well. The ECB said on Thursday it would raise its key interest rate from minus 0.5% to zero or higher by September, and possibly further thereafter. The central bank said it plans to start raising interest rates by a quarter of a percentage point in July. He also said he would end the large-scale bond-buying program on July 1st. In both the US and Europe, the announcement pushed shares down. The continental Stoxx Europe 600 lost about 1%. The euro strengthened against the dollar, rising 0.3%, reversing previous losses. Government bonds in Germany and the US fell, driving yields higher. Central bank moves in the US and Europe are coming as global inflation continues to weigh on households. On Friday, investors will have a new picture of inflation in the US when the data of the consumer price index for May are published. Economists surveyed by the Wall Street Journal expect the measure to show that US inflation remained stable at 8.3% in May, the same annual rate as in April. Traders and strategy analysts say inflation data could greatly influence the next phase of trading for the markets and help shape the Federal Reserve’s interest rate decisions for later this year. The Fed meeting in June will take place next week and the central bank is widely expected to raise its key interest rate by half a percentage point – a move that is expected to be repeated in July. “The concern here in the US is the Fed tightening into an economy that is already showing signs of slowing down,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management. “The ECB is limited to an even sharper slowdown. “This could affect global growth, which in turn could be another headwind for the company’s profits.” Much of the discussion in the markets has shifted to what the Fed could do at its September meeting. Until a clearer picture emerged, some traders were reluctant to place big bets in the market, say investors and strategy analysts. Some analysts say this has led to more volatile trading in recent sessions as they try to determine if this year’s selloff in the market has reached the bottom or if there could be more pain. Many also consider the possibility of a possible US recession. “People are not convinced one way or another and they are taking chips off the table,” said Viraj Patel, Vanda Research’s global chief strategist. “They do not want to be caught offside in any direction.” Treasury Secretary Janet Glenn was questioned by the Senate Finance Committee on Tuesday about the high rate of inflation in the United States and whether the Covid-19 rescue package played a role. Photo: Nicholas Kamm / AFP / Getty Images In trading in New York, Tesla shares added 5% after UBS upgraded the stock to buy from neutral, putting the electric vehicle company at a pace to extend its rally for a fourth day. Tesla shares have hit 31 percent this year, down from Wednesday, as investors dumped emerging market shares. The stock has also been influenced by CEO Elon Musk’s plan to buy Twitter. Shares of Alibaba Group Holding traded in the US lost 3.7% after China Securities Regulatory Commission denied a report that it was working on a possible revival of Ant Group’s initial public offering. Shares of Five Below fell 3.6% after the retailer reported a decline in first-quarter earnings as operating costs rose. In the Treasury market, the benchmark yield on the 10-year bond rose to 3.043%, from 3.028% on Wednesday. Yields and bond prices are reversing. In the energy markets, Brent crude, the international benchmark for oil prices, rose 0.03% to $ 123.62 a barrel, after a two-day rally on Wednesday. Oil prices have moved higher amid China’s emergence of Covid-19 lockdowns as traders continue to assess possible supply disruptions due to the war in Ukraine.

A trader worked on the floor of the New York Stock Exchange on Wednesday.

          Photo: Alyssa Ringler / Associated Press

In Asia, the Chinese Shanghai Composite lost 0.8%, despite data showing that the country’s exports recovered sharply in May. Hong Kong’s Hang Seng lost 0.7%, while the Japanese Nikkei 225 closed almost flat. Write to Caitlin McCabe at [email protected] Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8