MARKET SNAPSHOT: Stock Market Turns South, As Financial Slump Takes Toll On Wall Street

By Mark DeCambre and Barbara Kollmeyer, MarketWatchFeaturesDow Jones Newswires

Oil prices under fresh pressure, with a trade below $48 a barrel for West Texas Intermediate

U.S. stock-index gauges on Wednesday traded lower, albeit off the worst levels, on the last day of the month, as a slump in bank shares and a lackluster reading of economic reports weighed on investor sentiment.

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Wall also was awaiting the Federal Reserve's anecdotal report on economic conditions at its districts, known as the Beige Book.

The S&P 500 index , fell 5 points, or 0.2%, at 2,407, with the financial sector, down 1.2%, representing the worst performer among the broad-market gauge's 11 sectors, and energy down 0.7%.

The Dow Jones Industrial Average was trading 40 points, or 0.2%, lower at 20,990, with 2% or more declines in shares of J.P. Morgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) dragging blue chips firmly into the red. Combined, the pair of bank stocks were contributing the lion's share of the Dow's loss.

Meanwhile, the Nasdaq Composite Index , after briefly touching an intraday high of 6,221.99, was trading 15 points, or 0.3%, lower at 6,189.

All of the equity indexes were off their worst levels of the session in late-morning trade.

The benchmarks took a decided turn for the worst after a reading for pending-home sales came in worse than expected. Pending-home sales ( the National Association of Realtors fell 1.3% to a level of 109.8 from a reduction in the March reading. Meanwhile, a gauge of economic health, the Chicago business barometer, or Chicago PMI, fell to 55.8 in May from a 28-month high of 58.3 in April ( Any reading over 50 indicates improving conditions.

"I think what we are seeing some reaction to weakness in Chicago PMI and pending-home sales coming in worse than expected," said Colin Cieszynski, chief market strategist at CMC Markets.

Cieszynski said the market may be at a tipping point where a recent trend of soft data may support bearish views that economic growth doesn't warrant two additional rate hikes by the Federal Reserve in 2017. The Fed is widely expected to lift rates in June by a quarter point.

"The question the market is grappling with is, is the Fed raising rates in an environment in which perhaps the economic data are weakening more than you should see for a rate-hike cycle?" said Quincy Krosby, chief market strategist at Prudential Financial.

"The Fed has been clear [in past policy statements] that weaker data are just noise and that we are moving toward a stronger economic backdrop but at this stage the dollar should rise; also, we see 10-year yields which haven't moved higher," she said.

Indeed, the yield on the 10-year Treasury note hit a five-week low of 2.20% on Wednesday, while the dollar, as measured by the ICE U.S. Dollar Index , a gauge of the buck against six rivals, was off 0.3%.

"People are looking for reasons to buy, but it doesn't take a lot for markets to tumble back," Cieszynski said. "I think some traders are starting to throw in the towel."

Need to know:Tech rally overdone? The case for buying other stock sectors now (

On the month, the Nasdaq has been the best-performing among major indexes, up 2.3% in May, followed by a 1% gain for the S&P 500. Both indexes are set for their best monthly percentage gains since February 2017. The Dow is hanging on to a meager gain of about 0.3%.

U.S. stocks finished modestly lower on Tuesday driven by losses for energy shares, which continued their downtrend Wednesday, with U.S. crude-oil prices dipping below $48 a barrel.

Read:This money manager sees no end in sight for bull market (

Data reports: The Federal Reserve's Beige Book is due at 2 p.m. Eastern.

Among Fed speakers, San Francisco Fed President John Williams will give a speech on "global economic and financial challenges" at the Bank of Korea International Conference 2017 in Seoul, South Korea at 8:10 p.m. Eastern.

Stocks to watch: Shares of Michael Kors Holdings Inc.(KORS) dropped 10% in after maker of high-end accessories and clothing posted a loss for its fiscal fourth quarter ( and spoke of a challenging market.

Energy stocks also performed poorly on the slip in oil with shares of Transocean Ltd.(RIG) down 4.9%, Chesapeake Energy Corp.(CHK) down 3.4%, and Murphy Oil Corp. (MUR) down 3.4%.

Vera Bradley Inc.(VRA) was trading 6.6% higher, despite a weak quarterly report.

Other markets: Stocks in Asia had a mixed day, while Chinese equities inched higher after a gauge of manufacturing beat forecasts ( European stocks were little changed. The FTSE 100 index gave back earlier gains, sliding back into the red on fresh parliamentary election jitters (

The pound was trading around $1.29 (, in up-and-down trade for sterling ahead of the coming U.K. election.

Gold prices were trading higher as the dollar slumped, giving dollar-priced assets room to climb, because a weaker dollar makes those assets more attractive to buyers using weaker currencies.

(END) Dow Jones Newswires

May 31, 2017 11:54 ET (15:54 GMT)