US stocks sank on Friday after investors took two negative footprints on the US economy.
May inflation data showed that price increases accelerated unexpectedly last month, with consumer prices rising 8.6% year on year in May, the most since 1981. Consumer sentiment data released on Friday morning, reached a record low as inflation weighed on US households.
The S&P 500, Dow and Nasdaq fell sharply after printing. The S&P 500 fell 2.9 percent during the session and more than 5 percent from last Friday, to report its worst weekly performance since January. The index ended with just over 3,900, or its lowest level in about three weeks. The Dow was down 880 points, or 2.7 percent, and the Nasdaq Composite was down 3.5 percent by the end of Friday’s session.
Government bond yields jumped especially at the short end of the curve, and 2-year yields jumped to the highest 3%. The reference yield on 10-year bonds rose to over 3.1%. Crude oil prices in the United States fell to about $ 120 a barrel after rising above $ 122 a barrel earlier this week.
For market participants, the publication of the Consumer Price Index (CPI) of the Bureau of Labor Statistics was a key imprint, offering a new perspective on the extent to which price increases persist in the US economy. The index accelerated unexpectedly to report annual growth of 8.6% in May, after rising 8.3% in April. This marks the biggest jump since the end of 1981 and pulled out the previous 41-year high set in the March consumer price index, which rose 8.5%.
On a monthly basis, the CPI also jumped 1.0%, or more than the expected increase of 0.7%, and an increase of 0.3% in April. Core inflation, which excludes volatile food and energy prices, rose 6.0% year on year after rising 6.2% in April.
Inflation remains a dominant problem for investors, politicians and the American public this year. Higher prices have threatened to affect consumer spending – the main driver of US economic activity – as goods and services become increasingly inaccessible. Inflation has already shown signs of triggering a rotation of spending on some discretionary goods to other areas of purchase. And on Friday, the carefully monitored consumer sentiment index fell to a record low as inflationary fears weighed on Americans.
The story continues
And for investors, inflation has also become a key factor in the progress of Federal Reserve monetary policy. As the Fed aims to help reduce rising prices, the central bank is expected to raise interest rates by another half a point at next week’s policy meeting, which further increases the cost of borrowing and doing business for companies.
Amid these concerns about the impact of inflation on the economy and the Fed’s next steps, stocks continue to be fragmented. Each of the three main averages was on track to post a consecutive week of losses, based on Thursday’s closing prices. The S&P 500 aimed for a weekly decline of about 2%.
“At the end of the day, the markets are just facing a lot of uncertainty right now. And it’s not just this inflation story, “Jack Manley, global market strategist at JPMorgan Asset Management, told Yahoo Finance Live on Thursday. “We still have some uncertainty, some uncertainty about what the Fed will do. The war in Europe continues to rage. And we know that new events are happening on this front every few days.”
“It simply came to our notice then. And without any real clarity on these things, it is difficult for markets to move meaningfully up or down, “he added. “At the end of the day, that’s all the markets really want is news. And no news is bad news.”
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16:08 ET: Shares register the worst week since January, after inflation press shook markets
Here are the main market movements at 16:08 ET:
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S&P 500 (^ GSPC): -116.96 (-2.91%) to 3900.86
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Dow (^ DJI): -880.00 (-2.73%) to 31,392.79
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Nasdaq (^ IXIC): -414.20 (-3.52%) to 11,340.02
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Crude oil (CL = F): – $ 0.92 (-0.76%) to $ 120.59 per barrel
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Gold (GC = F): + $ 23.10 (+ 1.25%) to $ 1875.90 per ounce
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10-year treasury (^ TNX): +11.2 bps for 3.1560% yield
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11:08 ET: (Almost) nowhere to hide in Friday’s market
Our mailboxes were flooded on Friday morning with economists’ reactions to inflation data in May, and several stores used “nowhere to hide” as the main hook to talk about the data.
But that framework also applies to the market on this ugly Friday morning.
The Nasdaq was down 3.3 percent about 90 minutes after the session, and the S&P 500 was down 2.6 percent, while all 11 S&P sectors were lower and 8 were up more than 2 percent in morning trading. There are currently almost no safe places in this market.
In the real risk market, ARK Innovation (ARKK) is down more than 6% and the 2021 SPAC and IPO class is also under pressure. These were some of the best performers in the rally we have seen investors trying to gather over the last few weeks.
However, The Generals, formerly known as FAAMNG shares, all fell more than 3%, reflecting widespread stress on Friday. Apple (AAPL), which held up better than all other mega-tech names through this market sell-off, is again the most resilient manufacturer, falling 3.5% in morning trade.
Consumer Staples (XLP) is the best performing sector to date in today’s trade, down only 0.4% and increasing since opening. Grocery stores are the only bright spot on the market today, as higher food prices are likely to spill over into the end result of these companies in the coming months.
“Miles Woodland, senior editor of markets.”
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10:33 ET: Consumer sentiment drops to record low: U. Michigan
Consumer sentiment fell to its lowest level in early June, with rising pump prices particularly affecting US portfolios.
The University of Michigan’s preliminary consumer sentiment index fell to 50.2 in June, the lowest level ever since the institution began tracking data. This followed the May index of 58.4 and missed estimates of 58.1, according to Bloomberg.
“Consumer sentiment has fallen by 14% since May, continuing a downward trend over the past year and reaching its lowest recorded value comparable to the lowest level reached in the mid-1980 recession,” said Joan Hsu, director of consumers for the University of Michigan, a statement said.
“Consumers’ assessments of their personal financial situation have deteriorated by about 20%,” Hsu added. “Forty-six percent of consumers attribute their negative views to inflation, up from 38 percent in May; this share has been exceeded only once since 1981, during the Great Recession.
Hsu also noted that half of all consumers surveyed mentioned gas without prompting in their interviews, up from 30% in May.
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9:32 a.m. ET: Shares open lower as inflation rises further
Here are the main market movements at 9:32 AM ET:
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S&P 500 (^ GSPC): -69.64 (-1.73%) to 3,948.18
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Dow (^ DJI): -513.18 (-1.59%) to 31,759.61
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Nasdaq (^ IXIC): -219.70 (-1.87%) to 11,534.53
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Crude oil (CL = F): -0.47 $ (-0.39%) to $ 121.04 per barrel
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Gold (GC = F): – $ 18.50 (-1.00%) to $ 1834.30 per ounce
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10-year treasury (^ TNX): +3.7 bps to 3.0810% yield
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9:03 a.m. ET: Stock futures accelerate after CPI hot May
Here are the main market movements at 9:03 AM ET:
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S&P 500 futures (ES = F): -55.25 points (-1.38%) to 3961.00
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Dow futures (YM = F): -384 points (-1.19%) to 31,879.00
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Nasdaq futures (NQ = F): -198.75 points (-1.62%) to 12,076.25
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Crude oil (CL = F): + $ 0.07 (+ 0.06%) to $ 121.58 per barrel
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Gold (GC = F): – $ 8.30 (-0.45%) to $ 1844.50 per ounce
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10-year treasury (^ TNX): + 0.2 bps to 3.044% yield
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7:14 a.m. ET: Stock futures are mixed ahead of inflation data
Here are the main market movements at 7:14 AM ET:
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S&P 500 futures (ES = F): -6.25 points (-0.16%) to 4010.00
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Dow futures (YM = F): -85 points (-0.26%) to 32,178.00
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Nasdaq futures (NQ = F): +6.25 points (+ 0.05%) to 12,281.25
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Crude oil (CL = F): + $ 0.94 (+ 0.77%) to $ 122.45 per barrel
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Gold (GC = F): – $ 8.20 (-0.44%) to $ 1844.60 per ounce
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10-year treasury (^ TNX): -0.7 bps to 3.035% yield
NEW YORK, NEW YORK – JUNE 03: Traders work on the floor of the New York Stock Exchange (NYSE) at the beginning of the trading day on June 3, 2022 in New York. A new job report released by the Ministry of Labor this morning shows that employers added 390,000 jobs in May. Shares fell before the start of the start on Friday, returning the indices back to red for the week. (Photo by Spencer Platt / Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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