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Stock Market News for May 17, 2022

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U.S. stocks ended mostly lower on Monday with the S&P 500 giving up all its day’s gains in the final hour of trading, as weak data from China and the United States added to the worries of rising interest rates and a global economic slowdown. The Dow somehow managed to end in positive territory, while the S&P 500 and Nasdaq closed in the red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) added less than 0.1% or 26.27 points to close at 32,223.42 points.

The S&P 500 fell 0.4% or 15.88 points to finish at 4,008.01 points. The index has now closed in the red in six of the past eight sessions. Consumer discretionary, technology and real estate stocks were the biggest losers.

The Consumer Discretionary Select Sector SPDR (XLY) and the Real Estate Select Sector SPDR (XLRE) lost 2.2% and 0.8%, respectively. The Technology Select Sector SPDR (XLK) fell 0.9%. However, the Energy Select Sector SPDR (XLE) added 2.6%. Seven of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq shed 1.2% or 142.21 points to end at 11,662.79 points. The index is now 27% down from its record close of 16,057.44 points recorded on Nov 19, 2021.

The fear-gauge CBOE Volatility Index (VIX) was down 4.85% to 27.47. Advancers outnumbered decliners on the NYSE by a 1.08-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored declining issues. A total of 11.3 billion shares were traded on Monday, lower than the last 20-session average of 13.2 billion.

Concerns Over Economic Slowdown Grows

The Dow and the S&P 500 gave up almost all the gains in the final hours of trading on Monday. Markets ended last week in the green but the upbeat sentiment faded on Monday once again on worries about rising interest rates, global economic slowdown and surging inflation.

Investors are now skeptical that the Fed can check inflation without the economy getting pushed into recession. Treasury yields have risen this year as the Fed continues to tighten its monetary policy to check inflation. The 10-year Treasury yield that started the year at around 1.5% has since risen sharply. On Monday, it closed just below 2.9% after briefly eclipsing the 3% mark it had hit earlier this month.

This saw the already beaten-down tech stocks once again taking a hit on Monday. Tech stocks have been suffering since the beginning of the year and Monday was no different. Shares of Datadog, Inc. (DDOG - Free Report) and Atlassian Corporation Plc (TEAM - Free Report) plummeted 10.7% and 6.3% respectively, while electric vehicle company Tesla, Inc. (TSLA - Free Report) declined 5.9%. Tesla has a Zacks Rank #3 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Weak Data from China

If the existing concerns were not enough, fresh data and reports revealed that economic activity is being hampered in China owing to the recent COVID-induced lockdowns. This further raised concern for investors, weighing on the broader market.

Meanwhile, former Federal Reserve Chairman Ben Bernanke warned that the United States may be entering stagflation for the first time since the 1970s, which further raised concerns among investors.

Economic Data

Weak economic data weighed on the markets at the beginning of the week. The New York Fed’s Empire State business conditions index that measures the manufacturing activity in the state, fell to a negative 11.6 in May after declining as much as 36.2 points. Economists had projected a marginal decline and had expected the index to remain at 16.5. A reading below zero means deteriorating conditions.


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