Source: Wind
U.S. stocks fell sharply on Friday after a much-anticipated inflation report showed prices rose faster than expected and consumer confidence hit a record low.
The Dow Jones Industrial Average fell 880 points, or 2.73%, to close at 31,392.79. The S&P 500 lost 2.91% to end at 3,900.86. The Nasdaq Composite fell 3.52% to 11,340.02.
Nearly all of the Dow’s 30 stocks fell. Declining stocks outnumbered advancing ones by more than 5 to 1 on the NYSE. U.S. stocks rebounded from 2022 lows at the end of May on speculation that the worst of inflation may have passed, but Friday’s CPI report dashed those hopes. The S&P 500 is down nearly 19% from its all-time high and is now roughly in line with its closing low in May.
Apple shares fell nearly 3.9%. Salesforce fell 4.6% and Amazon fell more than 5%.
Friday’s drop meant Wall Street suffered its worst week in months. The Dow fell 4.58%, its 10th weekly loss in the past 11 weeks. The S&P 500 and Nasdaq Composite fell 5.05% and 5.60%, respectively, their ninth weekly losses in 10 years and their worst weeks since January.
The consumer price index (CPI) hit its highest level since 1981 in May, weighing on stocks. Prices rose 8.6 percent year-on-year, or 6 percent if food and energy prices were excluded, the report showed. Economists had expected year-on-year increases of 8.3% and 5.9% for the main and core indexes, respectively.
“This confirms some of the concerns I’ve heard from investors this week,” said Lori Calvasina, head of US equity strategy at RBC Capital Markets. She said this week Concerns about inflation have been weighing on the stock market.
For stocks to do better, we need to see energy prices pull back, says Jessica Inskip.
The high inflation data sparked fears among investors and the public that the U.S. economy could slip into recession. The University of Michigan’s preliminary June consumer confidence index fell well below expectations and hit a record low.
“It just reinforces the impact of the CPI data on consumer psychology and has a negative impact on consumer spending going forward. It’s a shocking number, but that’s what inflation does at a time this hot,” Black said. said Peter Boukwa of the Leigh Consulting Group.
Traders appeared to be bracing for more aggressive moves from the Federal Reserve in response to the surge in oil prices. The two-year U.S. Treasury yield, seen as one of the most sensitive indicators of Fed rate hikes, topped 3 percent on Friday to its highest level since 2008.
Technology stocks were under pressure as investors grappled with rising interest rates and a potential recession. Netflix shares fell more than 5% after Goldman Sachs downgraded Netflix. Chip giant Nvidia fell nearly 6%.
Bank and cyclical stocks were also lower, possibly reflecting recession fears. Shares of Wells Fargo fell 6% and Goldman Sachs fell more than 5%. Boeing fell 5%.
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