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Wall Street closed lower on Thursday, pulled down by a decline in growth stocks. Investors made their moves after carefully considering the mixed economic data, which signaled continued inflation. The 10-year Treasury yield resumed its climb after sliding in two straight sessions. All the three major indexes ended in the negative zone.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 0.3% or 113.36 points to close at 34,451.23. Nineteen components of the 30-stock index ended in the red, while 11 closed in the green.
The tech-heavy Nasdaq Composite lost 2.1% or 292.51 points to finish at 13,351.08 due to a tech decline.
The S&P 500 slid 1.2% or 54 points to end at 4,392.59. Nine of the 11 broad sectors of the benchmark index closed in the red.
The Technology Select Sector SPDR (XLK), the Communications Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) slipped 2.4%, 1.7% and 1.4%, respectively. The Energy Select Sector SPDR (XLE) gained 0.3%.
The fear-gauge CBOE Volatility Index (VIX) grew 4% to 22.70. A total of 10.5 billion shares were traded on Thursday, lower than the last 20-session average of 12.2 billion. Decliners outnumbered advancers on the NYSE by a 1.83-to-1 ratio. On Nasdaq, a 2.02-to-1 ratio favored declining issues.
Inflation Fear Drives Markets
Wall Street made losses on Thursday to end the holiday-shortened week. The markets moved as inflation dominated the investor mood last week. Two back-to-back U.S. inflation reports, namely the Consumer Price Index and the Producer Price Index, showed sharply increasing prices. Spiking gasolene prices also prompted the highest jump in import prices over a decade.
Investors carefully monitored the Q1 earnings reports released by various companies to assess how well they were managing inflationary pressures. Apprehensions about the imminent tightening of the monetary policy led to the slide in growth stocks. Large-cap tech stocks took a hit on Thursday as investors deemed them riskier.
On Thursday, the benchmark 10-year U.S. Treasury yield climbed 13 basis points to finish at 2.83%, its highest level since January 2019. The 2-year bond was recently hovering above the 10-year bond, triggering a yield curve inversion, which is often seen as a precursor to recession. Higher yields from risk-free treasury bonds indicate that future flows are not profitable in the current valuation.
Economic Data
In a report released by the Federal Reserve, capacity utilization of total industrial production for March came in at 78.3%. The figure for February was revised to 77.7% from 77.6%.
Total industrial production increased by 0.9% in March. The February data was revised to 0.9% from 0.5%.
The U.S. Bureau of Labor Statistics reported that the prices for U.S. imports advanced 2.6% in March, following a 1.6% increase in February. Higher fuel prices drove the March increase and nonfuel prices also increased.
The Labor Department said on Thursday that initial jobless claims were 185,000, increasing 18,000 for the week ending Apr 9. The four-week moving average was 172,250, marking a increase of 2000 from the previous week’s revised average of 170,250.
Continuing claims came in at 1,475,000, decreasing 48,000 from the previous week’s level of 1,523,000. The 4-week moving average came in at 1,511,500, a decrease of 29,750 from the previous week's unrevised average of 1,541,250.
The U.S. Census Bureau reported the Manufacturers’ and trade inventories for February, adjusted for seasonal and trading day differences, were estimated at $2,270.3 billion, up 1.5%. In January, it had increased 1.3%.
The Census Bureau also reported retail and food services sales for March 2022, adjusted for seasonal variation to be at $665.7 billion, an increase of 0.5% from the previous month. The February increase was revised from 0.3% to 0.8%.
Weekly Roundup
Wall Street closed a second consecutive losing week. All three major indexes finished in the red. The Nasdaq Composite, the S&P 500 and the Dow went down 3.5%, 2.3% and 0.3%, respectively, over the week. Investor mood was dominated by inflation fear as various reports released through the week signaled continued inflation. Rapid course-correction of the U.S. 10-year bond yield curve allayed apprehensions about an impending recession, but undermined the current valuation of various growth stocks, bringing them down.
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Stock Market News for Apr 18, 2022
Wall Street closed lower on Thursday, pulled down by a decline in growth stocks. Investors made their moves after carefully considering the mixed economic data, which signaled continued inflation. The 10-year Treasury yield resumed its climb after sliding in two straight sessions. All the three major indexes ended in the negative zone.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 0.3% or 113.36 points to close at 34,451.23. Nineteen components of the 30-stock index ended in the red, while 11 closed in the green.
The tech-heavy Nasdaq Composite lost 2.1% or 292.51 points to finish at 13,351.08 due to a tech decline.
The S&P 500 slid 1.2% or 54 points to end at 4,392.59. Nine of the 11 broad sectors of the benchmark index closed in the red.
The Technology Select Sector SPDR (XLK), the Communications Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) slipped 2.4%, 1.7% and 1.4%, respectively. The Energy Select Sector SPDR (XLE) gained 0.3%.
The fear-gauge CBOE Volatility Index (VIX) grew 4% to 22.70. A total of 10.5 billion shares were traded on Thursday, lower than the last 20-session average of 12.2 billion. Decliners outnumbered advancers on the NYSE by a 1.83-to-1 ratio. On Nasdaq, a 2.02-to-1 ratio favored declining issues.
Inflation Fear Drives Markets
Wall Street made losses on Thursday to end the holiday-shortened week. The markets moved as inflation dominated the investor mood last week. Two back-to-back U.S. inflation reports, namely the Consumer Price Index and the Producer Price Index, showed sharply increasing prices. Spiking gasolene prices also prompted the highest jump in import prices over a decade.
Investors carefully monitored the Q1 earnings reports released by various companies to assess how well they were managing inflationary pressures. Apprehensions about the imminent tightening of the monetary policy led to the slide in growth stocks. Large-cap tech stocks took a hit on Thursday as investors deemed them riskier.
As a result, shares of Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) lost 2.7%, and 3%, respectively. Microsoft carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
10-Year Treasury Yield Hits 3-Year High
On Thursday, the benchmark 10-year U.S. Treasury yield climbed 13 basis points to finish at 2.83%, its highest level since January 2019. The 2-year bond was recently hovering above the 10-year bond, triggering a yield curve inversion, which is often seen as a precursor to recession. Higher yields from risk-free treasury bonds indicate that future flows are not profitable in the current valuation.
Economic Data
In a report released by the Federal Reserve, capacity utilization of total industrial production for March came in at 78.3%. The figure for February was revised to 77.7% from 77.6%.
Total industrial production increased by 0.9% in March. The February data was revised to 0.9% from 0.5%.
The U.S. Bureau of Labor Statistics reported that the prices for U.S. imports advanced 2.6% in March, following a 1.6% increase in February. Higher fuel prices drove the March increase and nonfuel prices also increased.
The Labor Department said on Thursday that initial jobless claims were 185,000, increasing 18,000 for the week ending Apr 9. The four-week moving average was 172,250, marking a increase of 2000 from the previous week’s revised average of 170,250.
Continuing claims came in at 1,475,000, decreasing 48,000 from the previous week’s level of 1,523,000. The 4-week moving average came in at 1,511,500, a decrease of 29,750 from the previous week's unrevised average of 1,541,250.
The U.S. Census Bureau reported the Manufacturers’ and trade inventories for February, adjusted for seasonal and trading day differences, were estimated at $2,270.3 billion, up 1.5%. In January, it had increased 1.3%.
The Census Bureau also reported retail and food services sales for March 2022, adjusted for seasonal variation to be at $665.7 billion, an increase of 0.5% from the previous month. The February increase was revised from 0.3% to 0.8%.
Weekly Roundup
Wall Street closed a second consecutive losing week. All three major indexes finished in the red. The Nasdaq Composite, the S&P 500 and the Dow went down 3.5%, 2.3% and 0.3%, respectively, over the week. Investor mood was dominated by inflation fear as various reports released through the week signaled continued inflation. Rapid course-correction of the U.S. 10-year bond yield curve allayed apprehensions about an impending recession, but undermined the current valuation of various growth stocks, bringing them down.