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Wall Street whipsaws, S&P closes lower on worries of prolonged inflation

EconomyMay 12, 2022 06:46PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 11, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) - U.S. stocks ended a whipsaw session slightly lower on Thursday, as investors juggled signs of peaking inflation with fears that it could remain elevated, prompting ever more aggressive tightening from the Federal Reserve.

All three major U.S. stock indexes seesawed and the S&P 500 came within striking distance of confirming it entered a bear market after swooning from its all-time high reached on Jan. 3.

When the dust settled, the S&P and the Dow ended modestly red, but the Nasdaq eked out a modest gain.

The indexes have gyrated wildly in recent sessions, often reversing initial rallies or sell-offs by the closing bell.

"These wild swings of upwards of 2% up or down are extremely rare, and showcase a very fragile investor psyche for that amount of volatility to happen in such a short time frame," said Ryan Detrick, chief market strategist at LPL Financial (NASDAQ:LPLA) in Charlotte, North Carolina. "Continued concerns over inflation, which looks like it has peaked yet is staying stubbornly high, continues to concern investors, pushing the S&P to the brink of a bear market."

Market leading megacap names, which thrived during the low interest environment of the pandemic, were the biggest drag, with Apple Inc (NASDAQ:AAPL) and Microsoft Corp (NASDAQ:MSFT) weighing the heaviest.

Recent economic data, most recently the Producer Prices report released before the opening bell, suggested price growth reached its zenith in March.

Even so, the Fed is expected to hike key interest rates by at least 50 basis points at least three times in the coming months, in an effort to toss cold water on demand and rein in soaring prices.

The U.S. Senate on Friday confirmed Jerome Powell for a second term as Fed Chairman.

The move "was widely expected and it opens the door for the Fed to continue to battle the 40-year inflation highs, with many more interest rate hikes likely coming this year," Detrick added.

Geopolitical tensions surrounding Russia's war on Ukraine were dialed up by Finland's announcement that it would apply for NATO membership, with Sweden expected to follow suit. The Kremlin vowed to retaliate.

The conflict, dubbed by Russian President Vladimir Putin as a "special military operation," has fanned the flames of inflation by pressuring global energy and grain supplies.

The Dow Jones Industrial Average fell 103.81 points, or 0.33%, to 31,730.3, the S&P 500 lost 5.1 points, or 0.13%, to 3,930.08 and the Nasdaq Composite added 6.73 points, or 0.06%, to 11,370.96.

Six of the 11 major sectors of the S&P 500 wrapped up the day in positive territory, with healthcare enjoying the largest percentage gain.

Utilities and tech stocks suffered the biggest losses.

Earnings season is nearing the final stretch, and according to the most recent data, 79% of the S&P 500 companies who have posted results delivered better-than-expected earnings, according to Refinitiv.

Analysts now see aggregate first-quarter S&P 500 earnings growth of 11%, up from 6.4% at quarter-end, per Refinitiv.

Shares of luxury accessories company Tapestry (NYSE:TPR) Inc jumped 15.5% after expressing confidence in a rebound in Chinese demand once COVID restrictions are lifted.

Beyond Meat (NASDAQ:BYND) Inc dropped 4.2% after the plant-based food producer reported ballooning quarterly losses.

Twitter Inc (NYSE:TWTR) shed 2.2%. Its chief executive officer announced a hiring freeze and the departure of two of its leaders in view of the takeover effort by Elon Musk.

Declining issues outnumbered advancing ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored advancers.

The S&P 500 posted 1 new 52-week highs and 74 new lows; the Nasdaq Composite recorded 6 new highs and 1,317 new lows.

Volume on U.S. exchanges was 16.17 billion shares, compared with the 13.03 billion average over the last 20 trading days.

Wall Street whipsaws, S&P closes lower on worries of prolonged inflation
 

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Comments (20)
bsun sun
bsun sun May 12, 2022 3:53PM ET
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tomorrow if everything is green....Title will be like ....Invester confidence is sky high and no one fears inflation...Aha...
bsun sun
bsun sun May 12, 2022 3:53PM ET
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may be everyone is waiting for the war has ended ..please go and search for another scape goat
John Martin
John Martin May 12, 2022 3:53PM ET
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And then next week they gonna say “rate hike fears” “growth worries” lol
John Martin
John Martin May 12, 2022 2:51PM ET
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“Fears of prolonged inflation” what the ****** is that?
Keith Wilson
Keith Wilson May 12, 2022 2:14PM ET
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My GOD.....at LEAST change the headlines once in a while. Is this site copying the same headline day after day or something?
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William Smith
William Smith May 12, 2022 2:14PM ET
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First. then it should say "Biden Administration policies continue to destroy America and the free world". Now that would be consistent and accurate.
First Last
First Last May 12, 2022 2:14PM ET
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William Smith  Are you saying "fears of prolonged inflation" was NOT there yesterday?
Gennadiy Ryabkin
Gennadiy Ryabkin May 12, 2022 2:14PM ET
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William Smith Biden’s? it was Trump who pumped the stock with the ingenious idea of massive QE for folks who in the business from Goldman Sachs
First Last
First Last May 12, 2022 2:14PM ET
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William Smith   "Biden Administration policies" is pretty much the same as Trump's policies.  There has been many times after Trump's election loss when he was asked what he would do differently and he got nothing.
First Last
First Last May 12, 2022 2:14PM ET
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William Smith   Trump admin's policies were basically what Putin's policies Trump could get away w/ implementing.
Rob Stone
Rob Stone May 12, 2022 2:10PM ET
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Sell off is due to hedgies needing liquidity to pay for margin. Can you say OVER LEVERAGED!!!!Sad part is, look at everyone's 401k's...
Keith Wilson
Keith Wilson May 12, 2022 2:10PM ET
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It's more like the hedge funds selling because their investors want out.
Gennadiy Ryabkin
Gennadiy Ryabkin May 12, 2022 2:10PM ET
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Keith Wilson its strange hedge fund wasn’t able to proper HEDGE
Jim Divers
Jim Divers May 12, 2022 1:48PM ET
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Wall Street Falls on Rate Hike Concerns is the headine here. Fact is the market is tanking because there is no confidence in the guy we have running our country along with his entire team! That should be the headline.
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Jim Divers
Jim Divers May 12, 2022 1:48PM ET
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Gary Moses This is not about Trump
Gary Moses
Gary Moses May 12, 2022 1:48PM ET
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Jim Divers i never said that it was about trump. But youre basically blaming biden for all the problems in the US. Go back an reread my comment. I gave 3 major Reasons why ((no President)) in the World can ((fix the current situation right now)). Its going to take time for things to get better in our economy. I don’t care who the President is, it still would take time to fix our Economy right now.
First Last
First Last May 12, 2022 1:48PM ET
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Jim Divers   This is more about Putin-praising Trump than it is about Biden.  Putin is the one invading Ukraine and withholding fuel sales and spiking global inflation.  This is more about Putin than any potus.
Gary Moses
Gary Moses May 12, 2022 1:48PM ET
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First Last You Hit the NAIL ON THE HEAD. Things were getting bad with inflation etc, before the Putin invaded Ukraine. But things got Drasticaly Worse for the World after the Invasion.
First Last
First Last May 12, 2022 1:48PM ET
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Gary Moses   Retrumplicans cannot lay the blame at its proper place with Putin, because Trump is his lackey and Biden isn't.
First Last
First Last May 12, 2022 1:33PM ET
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Market can't be overvalued when the wealthy has too much wealth.  T.i.n.a.
Ja sui
Ja sui May 12, 2022 1:28PM ET
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Well just 31 days to go, 1k daily down n der u go zero zero. All problem solved.
niki velev
niki velev May 12, 2022 1:27PM ET
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sorry for the greedy Crypto-"Investors" .. daydreamers
niki velev
niki velev May 12, 2022 1:25PM ET
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the Market has to fall at least 50% .. its still too overvalued!
Trader Trader
Trader Trader May 12, 2022 1:25PM ET
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anani gotunden sikerim senin
Rob Stone
Rob Stone May 12, 2022 1:25PM ET
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80%
Jack Sharma
Jack_2017 May 12, 2022 1:24PM ET
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aren't you getting tired writing same ***daily??
 
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