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Wall Street closed sharply lower on Wednesday, led by a decline in consumer discretionary and tech stocks. Core inflation numbers released by the Labor Department came in high, which fueled fears about further interest rate hikes by the Fed and adversely impacted investor mood. Oil prices went up. All the three major indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 326.63 points to close at 31,834.11. Twenty-two components of the 30-stock index ended in the red, one remained unchanged, while seven ended in the green.
The tech-heavy Nasdaq Composite lost 3.2% or 373.44 points to close at 11,364.24, led by a decline in tech stocks.
The S&P 500 dipped 1.7% or 65.87 points to end at 3,935.18. Eight of the 11 broad sectors of the benchmark index closed in the red.
The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK), and the Communication Services Select Sector SPDR (XLC) lost 3.6%, 3.2% and 1.8%, respectively, while the Energy Select Sector SPDR (XLE) rose 1.3%.
The fear-gauge CBOE Volatility Index (VIX) decreased 1.3% to 32.56. A total of 15.4 billion shares were traded on Wednesday, higher than the last 20-session average of 12.8 billion. Decliners outnumbered advancers on the NYSE by a 2.16-to-1 ratio. On the Nasdaq, a 3.70-to-1 ratio favored declining issues.
High Inflation Numbers Pull Down Volatile Markets
Labor Department reported that Consumer Price Index (CPI) for all urban consumers increased 0.3% in April against a consensus of 0.2%, and the year-over-year index increased 8.3% through to April 2022 against an estimate of 8.1%. Even though the numbers were lower than the prior period, March, they were high enough for investors to worry that the Fed would have to increase interest rates further to tackle inflation, thereby bringing about an economic slowdown.
Even more concerning were the core CPI numbers, which exclude food and energy prices. Core CPI increased by 0.6% in April against a consensus of 0.4%, double that of March. The year-over-year increase in core CPI came in at 6.2%. With energy prices soaring over the past few months because of global issues, expectations were that the core CPI numbers would come in lower as inflation was deemed to have peaked by March. Although the general notion remains, and the report also suggests that inflation indeed may have already peaked, the higher-than-expected numbers kept investor mood sombre. Dow booked its worst 5-day streak in almost two years. Consumer discretionary and technology, among other growth stocks, were the worst hit in the session. A recessionary outlook makes growth stocks look overvalued at the current flow. Apple Inc’s (AAPL - Free Report) share fell 5.2%, pulling the maximum weight on the losses that the Dow and the S&P 500 made in the day. Oil prices rose because of Russia’s sanctions on a few European companies, thereby adding uncertainty to energy markets, but also helped in checking the losses the indexes made through the day.
The weekly report suggested that U.S. commercial crude oil inventories for the week ending May 6, 2022 had increased by 8.5 million barrels over the prior period. At 424.2 million barrels, the inventories are 13% below the five-year average for this time of the year.
In the prior week, inventories had increased by 1.3 million barrels.
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Stock Market News for May 12, 2022
Wall Street closed sharply lower on Wednesday, led by a decline in consumer discretionary and tech stocks. Core inflation numbers released by the Labor Department came in high, which fueled fears about further interest rate hikes by the Fed and adversely impacted investor mood. Oil prices went up. All the three major indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 326.63 points to close at 31,834.11. Twenty-two components of the 30-stock index ended in the red, one remained unchanged, while seven ended in the green.
The tech-heavy Nasdaq Composite lost 3.2% or 373.44 points to close at 11,364.24, led by a decline in tech stocks.
The S&P 500 dipped 1.7% or 65.87 points to end at 3,935.18. Eight of the 11 broad sectors of the benchmark index closed in the red.
The Consumer Discretionary Select Sector SPDR (XLY), the Technology Select Sector SPDR (XLK), and the Communication Services Select Sector SPDR (XLC) lost 3.6%, 3.2% and 1.8%, respectively, while the Energy Select Sector SPDR (XLE) rose 1.3%.
The fear-gauge CBOE Volatility Index (VIX) decreased 1.3% to 32.56. A total of 15.4 billion shares were traded on Wednesday, higher than the last 20-session average of 12.8 billion. Decliners outnumbered advancers on the NYSE by a 2.16-to-1 ratio. On the Nasdaq, a 3.70-to-1 ratio favored declining issues.
High Inflation Numbers Pull Down Volatile Markets
Labor Department reported that Consumer Price Index (CPI) for all urban consumers increased 0.3% in April against a consensus of 0.2%, and the year-over-year index increased 8.3% through to April 2022 against an estimate of 8.1%. Even though the numbers were lower than the prior period, March, they were high enough for investors to worry that the Fed would have to increase interest rates further to tackle inflation, thereby bringing about an economic slowdown.
Even more concerning were the core CPI numbers, which exclude food and energy prices. Core CPI increased by 0.6% in April against a consensus of 0.4%, double that of March. The year-over-year increase in core CPI came in at 6.2%. With energy prices soaring over the past few months because of global issues, expectations were that the core CPI numbers would come in lower as inflation was deemed to have peaked by March. Although the general notion remains, and the report also suggests that inflation indeed may have already peaked, the higher-than-expected numbers kept investor mood sombre. Dow booked its worst 5-day streak in almost two years.
Consumer discretionary and technology, among other growth stocks, were the worst hit in the session. A recessionary outlook makes growth stocks look overvalued at the current flow. Apple Inc’s (AAPL - Free Report) share fell 5.2%, pulling the maximum weight on the losses that the Dow and the S&P 500 made in the day. Oil prices rose because of Russia’s sanctions on a few European companies, thereby adding uncertainty to energy markets, but also helped in checking the losses the indexes made through the day.
Consequently, stocks like Netflix, Inc. (NFLX - Free Report) and Tesla, Inc. (TSLA - Free Report) dropped by 6.4% and 8.3%, respectively. Tesla 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 weekly report suggested that U.S. commercial crude oil inventories for the week ending May 6, 2022 had increased by 8.5 million barrels over the prior period. At 424.2 million barrels, the inventories are 13% below the five-year average for this time of the year.
In the prior week, inventories had increased by 1.3 million barrels.