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

Economy Jun 10, 2022 06:30PM ET
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2/2 © 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 2/2

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.

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.

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

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Comments (31)
Franklin Hazzard
Franklin Hazzard Jun 11, 2022 5:46AM ET
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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
Mark whitehouse
Mark whitehouse Jun 11, 2022 5:46AM ET
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I've been a big fan of TECS
Mark whitehouse
Mark whitehouse Jun 11, 2022 5:46AM ET
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I've been a big fan of TECS
Mark whitehouse
Mark whitehouse Jun 11, 2022 5:46AM ET
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I've been a big fan of TECS
Jay Garrelts
Jay Garrelts Jun 10, 2022 8:57PM ET
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90% of stocks are owned by those in the top 1% of wealth
Options Trader
Options Trader Jun 10, 2022 8:38PM ET
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I blame all of the Biden voters.
Ken Roth
Ken Roth Jun 10, 2022 8:38PM ET
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Biden has nothing to do with the inflation you must be a russian
Mart Bab
Rubberduck1973 Jun 10, 2022 7:00PM ET
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Much more pain ahead. Buy gold and you’ll be ok
Meru Pet
Meru Pet Jun 10, 2022 7:00PM ET
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for 2 and a half days
Ken Roth
Ken Roth Jun 10, 2022 4:19PM ET
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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
Steve Pate
Steve Pate Jun 10, 2022 4:19PM ET
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You haven't seen nothing yet. vix is obly at 28
Santosh Oak
Santosh Oak Jun 10, 2022 4:19PM ET
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Ya, buy AFTER the market goes down another 15% At least
Mitchel Pioneer
Mitchel Pioneer Jun 10, 2022 2:42PM ET
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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?
Mr Doodl
Mr Doodl Jun 10, 2022 2:27PM ET
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It’s the beginning of the great depression v2.
Francis Lim Wei
Francis Lim Wei Jun 10, 2022 2:09PM ET
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more heavy selling will come next week as institutions and money manager sells off. ECB joins in the rate hike and selling spree
Mitchel Pioneer
Mitchel Pioneer Jun 10, 2022 1:57PM ET
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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.
Ac Tektrader
Ac Tektrader Jun 10, 2022 1:49PM ET
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its the Republican president Trump that kissed the behinds of Putin and that fat dude NKorea dictator.... not the Democrats.
Picaso Fish
Picaso_Fish Jun 10, 2022 1:49PM ET
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yup, he wanted negative interest rates too! more than free money for the people
 
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