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Wall Street ends down on fears inflation will force tougher Fed tightening

Economy May 06, 2022 06:52PM ET
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© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., May 5, 2022. REUTERS/Andrew Kelly

By Echo Wang

(Reuters) - Wall Street's main indexes extended losses on Friday as investors worried that the Federal Reserve will need to be more aggressive than expected in raising interest rates to combat inflation.

The tech-heavy Nasdaq registered its lowest close since 2020, notching a fifth straight weekly loss, its longest losing streak since the fourth quarter of 2012. The S&P 500 also posted its fifth straight weekly loss, its longest string of weekly losses since the second quarter of 2011.

"Ninety-five percent of the driver of the market right now is long-term interest rates," said Jay Hatfield, founder and chief executive of Infrastructure Capital Management in New York.

The Labor Department presented stronger-than-expected jobs data with nonfarm payrolls increasing by 428,000 jobs in April, versus expectations of 391,000 job additions, underscoring the economy's strong fundamentals despite a contraction in gross domestic product in the first quarter.

The unemployment rate remained unchanged at 3.6% in the month, while average hourly earnings increased 0.3% against a forecast of a 0.4% rise.

Nine of the 11 major S&P sectors declined. Energy had a 2.9% gain as oil prices climbed on supply concerns. [O/R]

"Oil is up again, continuing the inflationary worries that we are seeing and energy is bucking the trend of a very weak market. But the higher natural gas and crude oil prices have been tailwinds for the energy sector this year," said Ryan Detrick, chief market strategist for LPL Financial (NASDAQ:LPLA).

Megacap growth stocks slipped, with a few exceptions including Apple Inc (NASDAQ:AAPL), which rose 0.5%. Wells Fargo (NYSE:WFC) & Co declined 0.5% to lead losses among big banks.

The Dow Jones Industrial Average fell 98.6 points, or 0.3%, to 32,899.37, the S&P 500 lost 23.53 points, or 0.57%, to 4,123.34 and the Nasdaq Composite dropped 173.03 points, or 1.4%, to 12,144.66.

  Most traders are expecting a 75 basis-point hike at the U.S. central bank's June meeting, despite Fed chief Jerome Powell's ruling that out.[IRPR]

All eyes are on the monthly consumer price index inflation report on Wednesday, as investors seek clues to whether the economy is nearing a peak in inflation.

Under Armour Inc (NYSE:UAA) slumped 23.8% after the sportswear maker forecast downbeat fiscal 2023 profit. Shares of rival Nike Inc (NYSE:NKE) also slipped.

Coinbase (NASDAQ:COIN) Global Inc dropped 9% on Friday to the lowest level since the cryptocurrency exchange's 2021 stock market debut.

Volume on U.S. exchanges was 13.49 billion shares, compared with the 12.10 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 2.49-to-1 ratio; on Nasdaq, a 3.04-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 63 new lows; the Nasdaq Composite recorded 15 new highs and 799 new lows.

Wall Street ends down on fears inflation will force tougher Fed tightening
 

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Comments (36)
Mart Bab
Rubberduck1973 May 07, 2022 4:55AM ET
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Aha
Anmol Enterprise
Anmol Enterprise May 07, 2022 3:39AM ET
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Monday market up.. full week up
John Lakran
John Lakran May 06, 2022 9:21PM ET
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so sick of inflation talk
John Lakran
John Lakran May 06, 2022 9:21PM ET
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In fact, the median inflation-adjusted return of U.S. stocks over the two years following periods of high inflation was nearly identical to the two-year return following periods of lower inflation (18.5% vs. 18.7%, respectively).
Minh Vo
Minh Vo May 06, 2022 3:47PM ET
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Can’t wait to see market collapse
First Last
First Last May 06, 2022 3:47PM ET
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Mark Buzaglo   If you think the retrumplicans don't manipulate, you've drunk too deeply of the orange kool-aid
Istvan Nagy
Istvan Nagy May 06, 2022 3:47PM ET
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will never collapse , if you see it collapsing you don't think about trading . it would be end of mankind.
ZS Beck
ZS Beck May 06, 2022 3:41PM ET
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Not sure who to blame? FED is to late to tighten? Democrats gave away way to much free money? All together and now is backfiring . Stimulus , essy money running out and now they working hard to destroy the market.Good job. 401K , savings going down.That's the end of the democrats, too much promise, nothing accomplished.
ZS Beck
ZS Beck May 06, 2022 3:41PM ET
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The market might go down before the pandemic levels before they pumped 10 T $ in it.
First Last
First Last May 06, 2022 3:41PM ET
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The Fed can't be expected to predict Russia's invasion nor CCP's shutdowns.
First Last
First Last May 06, 2022 3:41PM ET
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Btw, the Biden Admin did predict the invasion, but the Fed is more reactive than proactive.
Kein Waals
Kein Waals May 06, 2022 3:27PM ET
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Sell the dips
Mike Simms
Mike Simms May 06, 2022 3:22PM ET
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I remember when investing was a good idea
la popeye
la popeye May 06, 2022 3:22PM ET
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when you have 8 to 10 % inflation and 3 % at 10 y tb, you loose min. 7 % a year. right? or no ! so, what to buy ? bond ..no...shares...a few as dividend are low and debr high...real estate? when int. rise...last come will fail.gold ? yes. so why gold is NOT rising.Simple. Government manipulation, the biggest manioulation if all time above the sec because BRI basel, centeal banks...nobody want you to dump their currencies. Turkey ...70 % inflation. what do you buy. ? other currency...or gold. and turkey is not alone.
Devin Nathaniel
Devin Nathaniel May 06, 2022 3:10PM ET
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full of lies.
 
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