Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stocks pummeled by growth worries, U.S. dollar climbs

Economy May 18, 2022 04:46PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. A passerby wearing a protective face mask walks past an electric screen displaying a graph showing Japan's Nikkei share average, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan February 24, 2022. REUTERS/Issei Kato/Files 2/2

By Herbert Lash and Chuck Mikolajczak

NEW YORK (Reuters) - Global stocks plunged and the dollar strengthened for the first time in four sessions on Wednesday as concerns about rising inflation on economic growth soured sentiment.

The mood was underscored by a 9% surge in British consumer prices and a faster-than-expected acceleration in inflation in Canada.

British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8% last month, largely driven by rising food and shelter prices, Statistics Canada data showed.

British inflation is now the highest among major economies in Europe, but prices are rapidly rising worldwide, forcing central banks around the globe to hike interest rates and tamp down growth as suggested by a modest decline in U.S. homebuilding in April.

Soaring prices and material shortages have already hit homebuilding, the sector of the economy most sensitive to rates. But the U.S. Commerce Department report also showed a record backlog of houses to be built, indicating a decline in homebuilding potentially might be marginal.

Adding to the gloom caused by inflation were earnings results from Target Corp (NYSE:TGT), whose quarterly profit halved as it warned of a bigger margin hit this year due to rising fuel and freight costs.

Target shares plummeted 24.88%, its biggest one-day percentage drop since the "Black Monday" stock market crash on Oct. 19, 1987, a day after Walmart (NYSE:WMT) Inc warned of similar margin squeezes and saw its stock drop 11.4% for its biggest one-day percentage fall since Oct. 16, 1987.

"It was Walmart yesterday and everybody thought it was a one-off," said Dennis Dick, head of markets structure and a proprietary trader at Bright Trading LLC in Las Vegas. "Now that Target misses earning a lot more than Walmart even did, they're scared that consumer is not as strong as everybody think it is."

MSCI's gauge of stocks across the globe shed 2.74%, while in Europe, the pan-regional STOXX 600 index closed down 1.14%.

On Wall Street, the Dow Jones Industrial Average fell 3.56%, the S&P 500 lost 4.03% and the Nasdaq Composite dropped 4.73%.

The declines for the S&P 500 and Dow marked their biggest one-day percentage declines since June 11, 2020.

Few analysts are willing to predict the end to selling after a bruising first five months of the year for risk assets given the magnitude of macroeconomic uncertainty, with many anticipating market volatility will be the norm for some time.

The U.S. dollar gained ground as the sell-off in risk assets boosted the safe-haven appeal of the greenback, which was on pace to snap a three-session losing streak, a day after Fed Chair Jerome Powell pledged the U.S. central bank would ratchet up rates as high as needed to combat rising inflation.

The dollar index rose 0.581%, with the euro down 0.8% to $1.0463. The Japanese yen strengthened 0.92% to 128.23 per dollar.

Treasury yields fell, although a steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015% after Powell's hawkish comments.

The yield fell 8.1 basis points to 2.890% on Wednesday after a soft U.S. housing starts number.

The German two-year government bond yield shot to 0.444%, its highest since November 2011 after more hawkish central banker comments, and last was up 1.6 basis points at 0.386%. The European Central Bank's Klaas Knot said on Tuesday that a 50-basis-point rate hike in July was possible if inflation broadens.

Gold prices were little changed despite the risk-off environment as looming U.S. interest rate hikes and a resurgent dollar dimmed the metal's shine.

Spot gold was up 0.1% at $1,816.06 an ounce.

Oil prices dipped in volatile trade, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output.

U.S. crude settled down 2.5% at $109.59 per barrel and Brent settled at $109.11, down 2.52% on the day.

GRAPHIC: MSCI World equity index (https://fingfx.thomsonreuters.com/gfx/mkt/movanzkkopa/world%20stocks.PNG)

Stocks pummeled by growth worries, U.S. dollar climbs
 

Related Articles

Dow Futures Trade Lower After Positive Week
Dow Futures Trade Lower After Positive Week By Investing.com - Jun 26, 2022

By Oliver Gray  Investing.com - U.S. stock futures were trading lower during Sunday's evening deals, easing from a major rebound last week as investors monitored growing recession...

Israel stocks higher at close of trade; TA 35 up 1.79%
Israel stocks higher at close of trade; TA 35 up 1.79% By Investing.com - Jun 26, 2022

Investing.com – Israel stocks were higher after the close on Sunday, as gains in the Real Estate, Banking and Communication sectors led shares higher. At the close in Tel Aviv,...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
rob bbbbbbbb
rob bbbbbbbb May 18, 2022 1:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
WTF. Dollar GAINS with more inflation? Whats the matter with this picture?
Dany FX
Dany FX May 18, 2022 1:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Seems like to some algos the more you print dollars and the highest the inflation the stronger and more valuable the dollar is… crazy right!
rob bbbbbbbb
rob bbbbbbbb May 18, 2022 1:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
WTF. Dollar GAINS with more inflation? Whats the matter with this picture?
Marco cuevas
Marco cuevas May 18, 2022 5:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Surprise surprise....first China now UK affecting US stocks bunch of rubbish....it's we'd hedge funds can't help themselves they are starving for puny gains....they will pump it tomorrow then ro you blink on Friday..STOP UYING you are just getting ripped off.
Avi Vashistha
Avi Vashistha May 18, 2022 2:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Useless view
Fabio falec
falec May 18, 2022 1:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Every day the authors try to justify the movement, with opposite reasoning of the day before. Completely pointless
Wheel Nuts
Wheel Nuts May 18, 2022 1:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Exactly, very well said!
Mike Simms
Mike Simms May 18, 2022 1:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It’s beyond comical. Yesterday market went up becsuse investors “digested economic data”. Today market going down because investors are “digesting economic data”.
Steffen vdm
Steffen vdm May 18, 2022 1:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's a calm day, so what?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email