US stocks plummeted on Friday as investors digested two negative impressions 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 highest since 1981. Consumer sentiment data published on Friday morning reached an all-time low as inflation weighs on U.S. households. .
The S&P 500, Dow and Nasdaq fell sharply after printing. The S&P 500 sank 2.9% during the session, and more than 5% since last Friday to record its worst weekly performance since January. The index ended just a hair above 3,900, or its lowest level in about three weeks. The Dow plunged 880 points, or 2.7%, and the Nasdaq Composite fell 3.5% at the end of Friday’s session.
Treasury yields rose especially at the short end of the curve, and the 2-year yield jumped to 3%. The 10-year Treasury benchmark yield rose to more than 3.1%. U.S. crude oil prices fell by 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 impression, offering a new look at the extent to which price increases have persisted in the ‘American economy. The index accelerated unexpectedly to an annual increase of 8.6% in May, following the 8.3% increase in April. This was the biggest jump since the end of 1981 and removed the previous 41-year high in the March CPI, which rose by 8.5%.
In month-on-month terms, the CPI also rose by 1.0%, or 0.7% more than expected, and the 0.3% increase in April. Underlying inflation, which excludes volatile food and energy prices, rose 6.0% year-on-year after rising 6.2% in April.
Inflation has continued to be a dominant topic for investors, policymakers and the US public this year. Higher prices have threatened to weigh on consumer spending, the main driver of U.S. economic activity, as goods and services become increasingly inaccessible. Inflation has already shown signs of triggering a rotation of spending on some discretionary goods in other purchasing areas. And on Friday, a closely watched consumer sentiment index fell to an all-time low as inflationary concerns weighed on Americans.
The story goes on
And for investors, inflation has also become a key determinant in the Federal Reserve’s monetary policy path. As the Fed aims to help reduce rapidly rising prices, the central bank is expected to raise interest rates by half a point at next week’s policy-making meeting, further increasing the cost. of loans and doing business for companies.
Amidst these concerns about the impact of inflation on the economy and the Fed’s upcoming moves, stocks have continued to trade with agitation. Each of the top three averages was on track to record a week of consecutive losses, according to Thursday’s closing prices. The S&P 500 led to a weekly drop of about 2%.
“At the end of the day, markets are only facing a lot of uncertainty right now. And it’s not just this inflation story,” Jack Manley, global market strategist at JPMorgan, told Yahoo Finance Live on Thursday. Asset Management. “We still have some uncertainty, some lack of clarity about what the Fed will do. The war in Europe continues to rage. And we know that there are new developments on this front every few days.”
“There is a lot to digest right now. And without any real clarity on these things, it’s hard for markets to move up or down significantly,” he added. “Everything the markets want at the end of the day is news. And no news is bad news.”
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16:08 ET: Shares record the worst week since January after inflation hit the markets
These were the main movements in the markets from 16:08 ET:
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S&P 500 (GSPC): -116.96 (-2.91%) to 3,900.86
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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 (LC = F): -0.92 $ (-0.76%) to $ 120.59 per barrel
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Gold (GC = F): + $ 23.10 (+ 1.25%) to $ 1,875.90 per ounce
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10-year Treasury (^ TNX): +11.2 bp for 3.1560% yield
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11:08 am ET: (almost) no place to hide in the Friday market
Our inboxes were flooded Friday morning with economists’ reactions to May inflation data, and several stores used “don’t hide” as the main hook to talk about that data.
But that framework also applies to the market on this ugly Friday morning.
The Nasdaq is down 3.3% about 90 minutes after the session and the S&P 500 is down 2.6%, while the 11 S&P sectors are lower and 8 of these are down more than 2% in morning trading . There are almost no secure spaces in this market right now.
In the true risk-free market share, ARK Innovation (ARKK) has fallen by more than 6% and the 2021 SPAC and IPO class is also under pressure. These have been some of the best results of the rally that we have seen as investors have tried to gather in recent weeks.
However, “The Generals,” the group formerly known as FAAMNG Securities, has fallen more than 3 percent, showing the widespread stress Friday’s stock is putting on investors. Apple (AAPL), which has held up better than any of the other mega-cap tech names through this market sale, is once again making the most lasting performance, with a 3.5% drop in morning trading .
Consumer Staples (XLP) is the sector with the best performance so far in the current trading, only 0.4% and has recovered since the opening. Grocery stores are the only bright spot on the market today, as higher food prices are likely to pass on the results of these companies in the coming months.
—Myles Abroad, Senior Market Editor
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10:33 am ET: Consumer sentiment falls to an all-time low: U. Michigan
Consumer sentiment fell to an all-time low in early June, with rising bomb prices especially affecting Americans’ portfolios.
The University of Michigan’s preliminary June Consumer Sentiment Index dropped to 50.2, or an all-time low since the institution began tracking the data. That followed the May reading of 58.4 and lost 58.1, according to Bloomberg data.
“Consumer sentiment declined 14% since May, continuing a downward trend over the past year and reaching its lowest value, comparable to the lows reached in the mid-1980s recession,” he said. Joanne Hsu, director of Consumer Surveys at the University of Michigan, said in a statement.
“Consumer ratings on their personal financial situation worsened by about 20%,” Hsu added. “Forty-six percent of consumers attributed their negative views to inflation, compared with 38% in May; this share has only been exceeded once since 1981, during the Great Recession.”
Hsu also noted that half of all consumers surveyed mentioned gas without asking in their interviews, compared to 30% in May.
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9:32 am ET: Shares open lower after inflation rises further
These were the main movements in the markets from 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%) at 11,534.53
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Crude (LC = F): -0.47 $ (-0.39%) at $ 121.04 per barrel
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Gold (GC = F): $ 18.50 (-1.00%) to $ 1,834.30 per ounce
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10-year Treasury (^ TNX): +3.7 bp for 3.0810% yield
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9:03 am ET: stock futures accelerate lower after May CPI print
These were the main movements in the markets from 9:03 am ET:
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S&P 500 futures (ES = F): -55.25 points (-1.38%) to 3,961.00
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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 (LC = F): + $ 0.07 (+ 0.06%) to $ 121.58 per barrel
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Gold (GC = F): $ 8.30 (-0.45%) to $ 1,844.50 per ounce
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10-year cash flow (^ TNX): +0.2 bp for 3.044% yield
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7:14 am ET: Mixed stock futures before inflation data
These were the main movements of the markets from 7:14 am ET:
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S&P 500 futures (ES = F): -6.25 points (-0.16%) to 4,010.00
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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 (LC = F): + $ 0.94 (+ 0.77%) to $ 122.45 per barrel
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Gold (GC = F): $ 8.20 (-0.44%) to $ 1,844.60 per ounce
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10-year cash flow (^ TNX): -0.7 bp for 3.035% yield
NEW YORK, NEW YORK – JUNE 3: 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 City. A new employment report released this morning by the Department of Labor shows that employers added 390,000 jobs in May. Shares were down before the opening bell on Friday, putting the indexes back in the red during the week. (Photo by Spencer Platt / Getty Images)
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Emily McCormick is a Yahoo Finance journalist. Follow her on Twitter.
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