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Stock Market News for Apr 13, 2022

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Wall Street reversed early gains to end lower on Tuesday, pulled down by inflation data. Investors expected the Fed to implement a tighter monetary policy in light of the decades-high inflation. The 10-year Treasury yield dropped from a three-year high. All the three major indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) lost 0.3% or 87.72 points to close at 34,220.36. Twenty components of the 30-stock index ended in red, one remained unchanged, while nine closed in the green.

The tech-heavy Nasdaq Composite dropped 0.3% or 40.38 points to finish at 13,371.57 as tech stocks declined.

The S&P 500 dipped 0.3% or 15.08 points to end at 4,397.45. Six of the 11 broad sectors of the benchmark index closed in red.

The Financials Select Sector SPDR (XLF), the Health Care Select Sector SPDR (XLV) and the Communication Services Select Sector SPDR (XLC) dropped 1.1%, 1% and 0.8%, respectively, while the Energy Select Sector SPDR (XLE) gained 1.7%.

The fear-gauge CBOE Volatility Index (VIX) was down 0.5% to 24.26. A total of 11.3 billion shares were traded on Tuesday, lower than the last 20-session average of 12.6 billion. Decliners outnumbered advancers on the NYSE by a 1.07-to-1 ratio. On Nasdaq, a 1.26-to-1 ratio favored declining issues.

Inflation Hits 40-year high

Wall Street made early gains on Tuesday after core Consumer Price Index data came in lesser than expected, sparking sentiment that the inflation maybe past its peak. However, when adjusted for energy and food prices, inflation was seen to be at a 40-year high year over year. This got reflected in trading throughout the day as investors turned the early rally to selloff.

The turnabout was an immediate reaction to the remarks made by Fed Governor Lael Brainard, who, in an interview, mentioned that the Fed will “expeditiously” raise rates. There have been concerns that these policy moves could lead to a major slowdown of the economy, sending it into a recession.

Energy stocks rose with increased oil prices, but tech stocks took a beating on Tuesday as investors deemed them riskier in the wake of imminent interest rate hikes.

Shares of Marathon Oil Corporation (MRO - Free Report) gained 4.2%, and that of NVIDIA Corporation (NVDA - Free Report) declined 1.9%. Marathon Oil carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The 10-Year Treasury Yield Retreats From 3-Year-High

On Tuesday, the 10-year Treasury yield dropped more than 6 basis points to close at 2.72%, after it touched 2.82%, its highest level since December 2018, earlier in the day. This was the benchmark’s first decline in eight sessions, as the inflation numbers and the resultant market apprehension about Fed’s monetary policy tightening were factored in.

Economic Data

The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) for all urban consumers increased 1.2% in March on a seasonally adjusted basis after rising 0.8% in February. Over the last 12 months, the all items index increased 8.5% before seasonal adjustment, the highest since 1981.

The core CPI, which excludes food and energy prices, increased 0.3%, which is less than the estimated 0.5% for March. In February, core CPI had grown by 0.5%.


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