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Wall Street suffers biggest weekly loss since January after hot CPI data

Published 06/10/2022, 07:09 AM
Updated 06/10/2022, 06:30 PM
© Reuters. FILE PHOTO: A person pushes a shopping cart in a supermarket in Manhattan, New York City, U.S., March 28, 2022. REUTERS/Andrew Kelly

© Reuters. FILE PHOTO: A person pushes a shopping cart in a supermarket in Manhattan, New York City, U.S., March 28, 2022. REUTERS/Andrew Kelly

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks posted their biggest weekly percentage declines since January and ended sharply lower on the day Friday as a steeper-than-expected rise in U.S. consumer prices in May fueled fears of more aggressive interest rate hikes by the Federal Reserve.

Tech and growth stocks, whose valuations rely more heavily on future cash flows, led the decline. Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Apple Inc (NASDAQ:AAPL) drove losses in the S&P 500.

Following the inflation report, two-year Treasury yields, which are highly sensitive to rate hikes, spiked to 3.057%, the highest since June 2008. Benchmark 10-year yields reached 3.178%, the highest since May 9.

The U.S. Labor Department's report showed the consumer price index (CPI) increased 1.0% last month after gaining 0.3% in April. Economists polled by Reuters had forecast the monthly CPI picking up 0.7%.

Year-on-year, CPI surged 8.6%, its biggest gain since 1981 and following an 8.3% jump in May.

Stocks have been volatile this year, and recent selling has largely been tied to worries over inflation, rising interest rates and the likelihood of a recession.

"Today's report should extinguish any pretense that a 'pause' in rate hikes will likely be appropriate by the end of summer, as the Fed is clearly still behind the eight ball on bringing inflation under control," said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.

The Dow Jones Industrial Average fell 880 points, or 2.73%, to 31,392.79; the S&P 500 lost 116.96 points, or 2.91%, to 3,900.86; and the Nasdaq Composite dropped 414.20 points, or 3.52%, to 11,340.02.

The major indexes registered their biggest weekly percentage drops since the week ended Jan. 21, with the Dow down 4.58%, the S&P 500 down 5.06% and the Nasdaq down 5.60% for the week.

The S&P 500 is now down 18.2% for the year so far.

On Friday, the S&P 500 growth index took a 3.7% hit, while the value index fell 2.2%.

The inflation report was published ahead of an anticipated second 50 basis points rate hike from the Fed on Wednesday. A further half-percentage-point is priced in for July, with a strong chance of a similar move in September.

One worry is that an aggressive push higher on rates by the Fed could send the economy into recession.

Among the day's losers, Netflix Inc (NASDAQ:NFLX) slid 5.1% after Goldman downgraded the streaming video giant's stock to "sell" from "neutral" due to a possibly weaker macro environment.

Declining issues outnumbered advancing ones on the NYSE by a 5.70-to-1 ratio; on Nasdaq, a 4.05-to-1 ratio favored decliners.

© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., May 20, 2022. REUTERS/Andrew Kelly

The S&P 500 posted one new 52-week high and 44 new lows; the Nasdaq Composite recorded 17 new highs and 326 new lows.

Volume on U.S. exchanges was 12.62 billion shares, compared with the 11.88 billion average for the full session over the last 20 trading days.

Latest comments

90% of stocks are owned by those in the top 1% of wealth. That is a sign... Smart people know how to make money.  Make money in a falling market. SPXS, SQQQ
I've been a big fan of TECS
I've been a big fan of TECS
I've been a big fan of TECS
90% of stocks are owned by those in the top 1% of wealth
I blame all of the Biden voters.
Biden has nothing to do with the inflation you must be a russian
Much more pain ahead. Buy gold and you’ll be ok
for 2 and a half days
Time to buy I have waited for this panic selling for a long time and now is time to buy at high discount while companies are making profits
You haven't seen nothing yet. vix is obly at 28
Ya, buy AFTER the market goes down another 15% At least
And the 2PM "investors" appear with the predictability of the falling tide.  The laughingstock of the investing worlds knows no boundaries when it comes the FRAUD and criminal manipulation.  How many points in losses will magically vanish in the final hour today?
It’s the beginning of the great depression v2.
more heavy selling will come next week as institutions and money manager sells off. ECB joins in the rate hike and selling spree
Per the script, here come savvy "investors" to buy the most grossly overvalued equities in history "in late trade" so they can hold over the weekend after the release of raging inflation data.  Another credible day of "trade" in the laughingstock of the investing world.
its the Republican president Trump that kissed the behinds of Putin and that fat dude NKorea dictator.... not the Democrats.
yup, he wanted negative interest rates too! more than free money for the people
Here is another great achievement done by the democrats other than high crime rate. Putin and that fat dude in n korea thank democrats.
stephan because of Putin's obsession to recreate a Russian empire. 30000 dead young Russians, because of Russia's invasion and war in Ukraine, disrupted energy and food production and distribution. state control of the Russian bond and stock markets, Russian economy is in disaray. Putin has single handed, distroyed Russia's financial, political, and military reputation. he has enlarged and united the West and Nato against him. Putin is incompetent and needs to be removed before he destroys the Russian nation.
Thank you Putin for the stimulus check... oh no wait, it's not him
that doesn't make sense meru... is english a second language for you?
tell me you don't like foreigners. i guess republicans understood my message.
Inflation will tank when fuel gets under control but until American hating liberals get booted from office we are stuck
the only haters are the right wing Republicans that want to overthrow our democratic institutions, and replace them with a strong man autocratic government, that supports white privilege and religious bigotry.
Its a joke lol
The fed will do only what the market wants. The fed is a slave to its masters. The fed is an absolute joke.
Putin why is inflation in USA???????!!!!!!
carlos you haven't been to Moscow lately have you. massive unemployment small retail shutting down shortages building in key industries. and as far as corruption Russia running mafia style shakedown operations by Putin and his government..... military becoming a world wide laughing stock because not corruption and incompetence.....
Banning Russia Oil has backfire and we are hurting more..Find way to bring down gas
Yes but you are saving millions of humans on the other side of the map...Would you rather not?!
mitch is back with more of his complaining and and proving he doesn't understand how markets work. this is a truly a trader's market. this is what a typical bear market looks like. mitch find another way to invest your money before this market takes you to the cleaners.
Banning Russia Oil has backfire and we are hurting more..Find way to bring down the gas prices then you can control the inflation
Ban russian gas oil and everything else. EF russia
Another mitigated loss in the laughingstock of the financial world.  600 point, tightrope walk "rallies" on nothing, and shored up losses, only in the biggest investment JOKE in the world.
My futures show that we are still scraping the bottom. But I do not doubt that "investors" will start buying the "dip" in the afternoon.
give it another hour or so
Should have been unnerved after the election results were in.
such a dummy
gold is due for a seasonal summer rally. but if it can't reach it's highs and fails. then gold could start a move to the downside that could last for the foreseeable future. it's possible that it could be years before it can recover it's highs.
Raise the rate to meet the 2 yr T note and get it over with! The fed is just sitting on their hands
Fed is doing more damage than good...
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