July 7, 2022

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Wall Street suffered its biggest weekly loss since January after hot CPI data

Wall Street suffered its biggest weekly loss since January after hot CPI data

  • The CPI rose to 1% in May from 0.3% in April
  • Netflix falls after Goldman Sachs downgrades its rating to ‘sell’
  • Indices: Dow Jones down 2.7%, S&P 500 down 2.9%, Nasdaq down 3.5%

NEW YORK (Reuters) – U.S. stocks posted their biggest weekly percentage decline since January and closed sharply lower on Friday as a bigger-than-expected rise in U.S. consumer prices in May led to fears of bigger increases in interest rates by the Federal Reserve.

Technology and growth stocks, whose valuations are more dependent on future cash flows, led the decline. Microsoft Corporation (MSFT.O)Amazon.com Inc (AMZN.O) and Apple (AAPL.O) Led losses in the S&P 500.

After the inflation report, two-year Treasury yields, which are highly sensitive to rising interest rates, rose to 3.057%, the highest since June 2008. The 10-year yield was 3.178%, the highest since May 9.

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The US Labor Department report showed that the Consumer Price Index (CPI) rose 1.0% last month after rising 0.3% in April. Economists polled by Reuters had expected the monthly CPI to rise 0.7%.

On an annual basis, the CPI rose 8.6%, its biggest gain since 1981 and after a 8.3% jump in May. Read more

Stocks have been volatile this year, and the recent sale has largely been linked to concerns about inflation, higher interest rates, and the possibility of a recession.

said Jason Pride, chief investment officer at private wealth firm Glenmede in Philadelphia.

Dow Jones Industrial Average (.DJI) It fell 880 points, or 2.73%, to 3,1392.79 points. Standard & Poor’s 500 (.SPX) It lost 116.96 points, or 2.91%, to 3,900.86 points. And the Nasdaq (nineteenth) It fell 414.20 points, or 3.52%, to 11,340.02 points.

Major indices posted their biggest weekly percentage decline since the week ending Jan. 21, with the Dow Jones down 4.58%, the S&P 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 (.IGX) I got 3.7%, while the value index (.IVX) It fell 2.2%.

The inflation report was released ahead of the second rate hike expected by 50 basis points from the Federal Reserve on Wednesday. Another half a percentage point is priced for July, with a strong chance of a similar move in September.

One concern is that a strong interest rate push by the Federal Reserve could push the economy into recession. Read more

Among the losers today, Netflix Inc (NFLX.O) It fell 5.1% after Goldman cut the streaming video giant’s stock rating to “sell” from “neutral” due to the prospect of a weaker macro environment.

Low issues outnumbered advanced issues on the New York Stock Exchange by 5.70 to 1; On the Nasdaq, the ratio was 4.05 to 1 in favor of declining stocks.

S&P 500 set a new 52-week high and 44 new low; The Nasdaq recorded 17 new highs and 326 new lows.

Volume on US exchanges was 12.62 billion shares, compared to an average of 11.88 billion for the full session over the last 20 trading days.

Additional reporting by Devik Jain, Mehnaz Yasmin and Shreyachi Sanyal in Bengaluru and Davide Barbushia in New York. Editing by Jonathan Otis

Our criteria: Thomson Reuters Trust Principles.