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Wall Street closed sharply lower on Thursday as a major part of the U.S. government bond yield curve inverted in late trading session. Market participants are highly concerned about an impending recession of the U.S. economy. A series of weak economic data also dented investors’ confidence. All three major stock indexes ended in red. However, for the month as a whole, these indexes finished in positive territory. On the other hand, major indexes suffered huge setbacks and closed in red in the first quarter of 2022.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.6% or 550.46 points to close at 34,678.35. All components of the 30-stock index ended in negative territory. The tech-heavy Nasdaq Composite finished at 14,220.52, sliding 1.5% or 221.76 points due to the weak performance of large-cap technology stocks.
Meanwhile, the S&P 500 dropped 1.6% to end at 4,530.41. All 11 broad sectors of the benchmark index closed in negative zone. The Financials Select Sector SPDR (XLF), the communications services Select Sector SPDR (XLC), the materials Select Sector SPDR (XLB) and the Technology Select Sector SPDR (XLK) tanked 2.3%, 1.9%, 1.5% and 1.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 6.4% to 20.56. A total of 12.08 billion shares were traded Thursday, lower than the last 20-session average of 13.9 billion. Decliners outnumbered advancers on the NYSE by a 1.61-to-1 ratio. On Nasdaq, a 1.74-to-1 ratio favored declining issues.
Yield Curve Inversion
The yield on 2-Year U.S. Treasury Note and 10-Year U.S. Treasury Note inverted for a brief period in late trading session. This happened for the first time since 2019. At one point of time, the yield on the 10-Year U.S. Treasury Note fell to 2.331%, while the yield on the 2-Year U.S. Treasury Note dropped to 2.337%. Finally, the two yields closed at 2.34%. Earlier, in the week, the yields of the 5-Year and 30-Year U.S. Treasury Noted inverted.
The inversion of the term structure of the government bond, especially, the inversion of 2-Year and 10-Year yields is a major indicator for an upcoming recession of the U.S. economy. Consequently, share of major banks like The Goldman Sachs Group Inc. (GS - Free Report) and Bank of America Corp.(BAC - Free Report) plummeted 1.6% and 4.1%, respectively. Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Department of Labor reported that weekly jobless claims increased 14,000 to 202,000 for the week ended Mar 26. The consensus estimate was 200,000. Previous week’s data was revised upward to 188,000 from 187,000 reported earlier.
Continuing claims (those who already received government benefits) dropped to 1.307 million for the week ended Mar 19, marking the lowest level since Dec 27, 1969. Previous week’s data was revised to 1.342 million.
The Department Commerce reported that Personal Consumption Expenditure (PCE) price index fell 0.4% in February. January’s data was revised upward to 2.1% from 1.5% reported earlier. Year over year, the headline PCE inflation jumped 6.4% year over year, the fastest pace since January 1982.
The core (excluding food and energy items) PCE inflation rose 0.4% in February, inline with the consensus estimate. February’s data was 0.5%. Year over year, the core PCE inflation climbed 5.4% year over year, the fastest pace since April 1983.
Personal spending rose by 0.2% in February compared with the consensus estimate of 0.5%. January’s growth rate was revised upward to 2.7% from 2.1% reported earlier. Personal income grew by 0.5% in February compared with 0.1% in January. The consensus estimate was 0.5%. Personal savings rate came in at 6.3% in February. January’s data was revised downward to 6.1% from 6.4%.
Monthly Roundup
Last month was a solid one for Wall Street. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – gained 2.3%, 3.6% and 3.4%, respectively. A series of negotiations between Russia and Ukraine to resolve geopolitical disputes, cooling down of commodity prices, especially, for crude oil and investors’ expectation of a 2% interest rate hike by the Fed, which seems already factored in market valuation, resulted in stock market rally.
Quarterly Roundup
U.S. stock markets completed a highly disappointing first quarter 2022. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – tumbled 4.6%, 4.9% and 9.1%, respectively. This marked the worst quarterly performance by these three indexes since the first quarter of 2022, at the onset of coronavirus outbreak.
Mounting inflation, the beginning of the higher interest rate regime by a hawkish Fed, Russia-Ukraine war and soaring commodity prices significantly dented market participants’ confidence on risky assets like equities. The yield on the benchmark 10-Year U.S. Treasury Note rose 82.8 basis points, its highest jump in first quarter since March 2021.
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Stock Market News for Apr 1, 2022
Wall Street closed sharply lower on Thursday as a major part of the U.S. government bond yield curve inverted in late trading session. Market participants are highly concerned about an impending recession of the U.S. economy. A series of weak economic data also dented investors’ confidence. All three major stock indexes ended in red. However, for the month as a whole, these indexes finished in positive territory. On the other hand, major indexes suffered huge setbacks and closed in red in the first quarter of 2022.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.6% or 550.46 points to close at 34,678.35. All components of the 30-stock index ended in negative territory. The tech-heavy Nasdaq Composite finished at 14,220.52, sliding 1.5% or 221.76 points due to the weak performance of large-cap technology stocks.
Meanwhile, the S&P 500 dropped 1.6% to end at 4,530.41. All 11 broad sectors of the benchmark index closed in negative zone. The Financials Select Sector SPDR (XLF), the communications services Select Sector SPDR (XLC), the materials Select Sector SPDR (XLB) and the Technology Select Sector SPDR (XLK) tanked 2.3%, 1.9%, 1.5% and 1.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 6.4% to 20.56. A total of 12.08 billion shares were traded Thursday, lower than the last 20-session average of 13.9 billion. Decliners outnumbered advancers on the NYSE by a 1.61-to-1 ratio. On Nasdaq, a 1.74-to-1 ratio favored declining issues.
Yield Curve Inversion
The yield on 2-Year U.S. Treasury Note and 10-Year U.S. Treasury Note inverted for a brief period in late trading session. This happened for the first time since 2019. At one point of time, the yield on the 10-Year U.S. Treasury Note fell to 2.331%, while the yield on the 2-Year U.S. Treasury Note dropped to 2.337%. Finally, the two yields closed at 2.34%. Earlier, in the week, the yields of the 5-Year and 30-Year U.S. Treasury Noted inverted.
The inversion of the term structure of the government bond, especially, the inversion of 2-Year and 10-Year yields is a major indicator for an upcoming recession of the U.S. economy. Consequently, share of major banks like The Goldman Sachs Group Inc. (GS - Free Report) and Bank of America Corp.(BAC - Free Report) plummeted 1.6% and 4.1%, respectively. Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Department of Labor reported that weekly jobless claims increased 14,000 to 202,000 for the week ended Mar 26. The consensus estimate was 200,000. Previous week’s data was revised upward to 188,000 from 187,000 reported earlier.
Continuing claims (those who already received government benefits) dropped to 1.307 million for the week ended Mar 19, marking the lowest level since Dec 27, 1969. Previous week’s data was revised to 1.342 million.
The Department Commerce reported that Personal Consumption Expenditure (PCE) price index fell 0.4% in February. January’s data was revised upward to 2.1% from 1.5% reported earlier. Year over year, the headline PCE inflation jumped 6.4% year over year, the fastest pace since January 1982.
The core (excluding food and energy items) PCE inflation rose 0.4% in February, inline with the consensus estimate. February’s data was 0.5%. Year over year, the core PCE inflation climbed 5.4% year over year, the fastest pace since April 1983.
Personal spending rose by 0.2% in February compared with the consensus estimate of 0.5%. January’s growth rate was revised upward to 2.7% from 2.1% reported earlier. Personal income grew by 0.5% in February compared with 0.1% in January. The consensus estimate was 0.5%. Personal savings rate came in at 6.3% in February. January’s data was revised downward to 6.1% from 6.4%.
Monthly Roundup
Last month was a solid one for Wall Street. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – gained 2.3%, 3.6% and 3.4%, respectively. A series of negotiations between Russia and Ukraine to resolve geopolitical disputes, cooling down of commodity prices, especially, for crude oil and investors’ expectation of a 2% interest rate hike by the Fed, which seems already factored in market valuation, resulted in stock market rally.
Quarterly Roundup
U.S. stock markets completed a highly disappointing first quarter 2022. The three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – tumbled 4.6%, 4.9% and 9.1%, respectively. This marked the worst quarterly performance by these three indexes since the first quarter of 2022, at the onset of coronavirus outbreak.
Mounting inflation, the beginning of the higher interest rate regime by a hawkish Fed, Russia-Ukraine war and soaring commodity prices significantly dented market participants’ confidence on risky assets like equities. The yield on the benchmark 10-Year U.S. Treasury Note rose 82.8 basis points, its highest jump in first quarter since March 2021.