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Wall Street ends lower as Cisco and Apple sink

Published 05/19/2022, 06:55 AM
Updated 05/19/2022, 07:19 PM
© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., May 18, 2022. REUTERS/Andrew Kelly

© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., May 18, 2022. REUTERS/Andrew Kelly

By Devik Jain and Noel Randewich

(Reuters) - Wall Street ended lower after a volatile session on Thursday, with Cisco Systems (NASDAQ:CSCO) slumping after giving a dismal outlook, while investors fretted about inflation and rising interest rates.

Shares of Cisco slumped 13.7% after the networking gear maker lowered its 2022 revenue growth outlook, taking a hit from its Russia exit and component shortages related to COVID-19 lockdowns in China.

Apple (NASDAQ:AAPL) and chipmaker Broadcom (NASDAQ:AVGO) declined 2.5% and 4.3%, respectively, and weighed on the S&P 500.

"The reality is that inflation is running hot and interest rates are rising," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, Minnesota. "Until you get that inflation rate to start slowing, we're going to have increased volatility, and in our view that continues through throughout most of the summer months."

Twitter (NYSE:TWTR) climbed 1.2% after Bloomberg reported that company executives told staff that Elon Musk's $44-billion deal was proceeding as expected and they would not renegotiate the price.

The S&P consumer staples index fell 2% to its lowest level since December as retail firms face the brunt of rising prices hurting the purchasing power of U.S. consumers.

Kohl's Corp (NYSE:KSS) became the latest retailer to flag a hit from four-decades high inflation as the department store chain cut its full-year profit forecast.

Its shares, however, rebounded over 4% after slumping 11% in the previous session due to dismal results from Target Corp. (NYSE:TGT)

The S&P 500 is down about 18% from its record close on Jan. 3 as investors adjust to strong inflation, geopolitical uncertainty stemming from the war in Ukraine and tightening financial conditions with the U.S. Federal Reserve raising rates.

A close of 20% or more below its January record high would confirm the S&P 500 has been in a bear market since hitting that peak, according to a widely used definition.

GRAPHIC: S&P 500 bear markets (https://fingfx.thomsonreuters.com/gfx/mkt/egpbkwmlgvq/Pasted%20image%201652990180837.png)

Goldman Sachs (NYSE:GS) strategists predicted a 35% chance of the U.S. economy entering a recession in the next two years, while the Wells Fargo (NYSE:WFC) Investment Institute expects a mild U.S. recession at the end of 2022 and early 2023.

The S&P 500 declined 0.58% to end the session at 3,900.79 points.

The Nasdaq declined 0.26% to 11,388.50 points, while the Dow Jones Industrial Average declined 0.75% to 31,253.13 points.

GRAPHIC: S&P 500's busiest trades (https://fingfx.thomsonreuters.com/gfx/mkt/akvezranxpr/SPX_by_busiest_trades.png)

Thursday's mixed performance followed a drop of over 4% in the S&P 500 on Wednesday, the benchmark's worst one-day loss since June 2020.

The CBOE volatility index, also known as Wall Street's fear gauge, fell to 29.5 points on Thursday, after hitting its highest level since May 12 earlier in the session.

Canada Goose Holdings (NYSE:GOOS) Inc jumped almost 10% after it forecast upbeat annual earnings, encouraged by strong demand for its luxury parkas and jackets.

Volume on U.S. exchanges was 12.7 billion shares, compared with a 13.4 billion average over the last 20 trading days.

© Reuters. FILE PHOTO: A person passed by Cisco stand at the GSMA's 2022 Mobile World Congress (MWC) in Barcelona, Spain March 1, 2022. REUTERS/Albert Gea

Advancing issues outnumbered declining ones on the NYSE by a 1.15-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored advancers.

The S&P 500 posted 1 new 52-week highs and 43 new lows; the Nasdaq Composite recorded 12 new highs and 326 new lows.

Latest comments

S&P will FART to 3200 by the time Sept rate hike kicks in and liquidity is sucked out with taper in 3 months
Steve has unfortunately acquired a lot of Stocks. He tried to Market it out today, but there was little volume. He is thinking to do a Gap & Trap overnight and try to bring in some buyers...
Another "late trade" miracle underway, as savvy "investors" crawl over each other to "buy" into the close.  Love the vertical spikes, clearly driven by shoving Monopoly money down the market's throat by the fist full.  Yes indeed, no getting around the fact that the US Ponzi Scheme has cemented its place in history as the greatest financial fraud in the world.  Will it magically turn green by the close?
and as if by magic mitchel is here with another repetitive negative comment that everyone is bored or reading, hooray!
Down trend in last hour.  Wrong again.
Maybe dual mandates for Fed should be changed to supporting US defense and protecting social security.
Probably. two more rate hikes and that's it. Then eliminating tariffs on China? Would be perfect.
Retirees need higher interset rates for boosting their fixed income. This is the key reason for Fed hikes. Fair enough.
Stock market will frustrate Fed. As Fed raises rates, stock market will rally even strongly.
Manufacturing recession to control inflation is unwise.
Maybe Fed doesn't matter. Cryptos weaken Fed. Stock market rules. Let's roll.
A trader blaming the Fed is like a batter blaming the sun.  The sun is always shining and always takes a predictable path.
Ah yes, 11AM, and the curtain rises on the criminal magic show called the US Ponzi Scheme.  Remarkable how the "market" doesn't tank at 11AM during a "rally."  And Wall Street would have you believe that savvy "investors" are doing the "buying."  BIGGEST INVESTMENT JOKE IN THE WORLD.
 The market can be, and still is a fraud, even though it's down.  And to be able to repeat something over and over, means the market is a predictable joke, run by computers.  And how, pray tell, is buying all these dips?  Why aren't "investors" selling the tops during "rallies"?
fine but you make the same point day after day, nothings going to change or differ if you keep repeating yourself, so please with all due respect, give it a rest!
They ARE "selling the tops"!  That's why the market keeps making new yearly lows.
billionaires turned market into a casino. Nobody besides said billionaires will want to play when fundamentals do not matter and only the "in the know" people understand what is going on.
US stock market has always been the rich's game
Stock market vs. Fed. Stock market will win.
Buying frenxy kicks in. Maybe stock market will save the economy. Stock market is patriotic.
Artificial market
Is there a "natural" market we can participate in?
Time to cut interest rate. Inflation doesn't matter. Save the economy.
If they expect same growth numbers as witnessed under the endless money printing regime, we are ******
zip tow!!!! :)
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