Wall Street whipsaws, S&P closes lower on worries of prolonged inflation

  • Producer prices fall in April
  • S&P 500 flirts with bear market confirmation
  • Tapestry jumps after positive Q3 results
  • Indices: Dow down 0.33%, S&P down 0.13%, Nasdaq up 0.06%

NEW YORK, May 12 (Reuters) – U.S. stocks closed a whipsaw session on Thursday, slightly lower, as investors juggled signs of inflation spikes with fears it could remain high, leading to an increasingly aggressive tightening by the Federal Reserve.

All three major US stock indices swung and the S&P 500 came within close range of confirmation that it was entering a bear market after swooning from its all-time high on Jan. 3.

As the dust settled, the S&P and Dow ended modestly in the red, but the Nasdaq made modest gains.

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The indices have fluctuated wildly in recent sessions, with initial rallies or sell-offs often reversed at the closing bell.

“These wild swings of more than 2% up or down are extremely rare and demonstrate a very fragile investor psyche for the amount of volatility that can occur in such a short span of time,” said Ryan Detrick, chief market strategist at LPL Financial in Charlotte. , North Carolina. Ongoing concerns about inflation, which appears to have peaked but remains stubbornly high, continue to worry investors and push the S&P to the brink of a bear market.

Market-leading mega-cap names, which have thrived during the low-rate environment of the pandemic, have been the biggest drag, with Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) weighing the most.

Recent economic data, most recently the Producer Prices report released before the opening bell, suggested that price growth peaked in March. read more

Still, the Fed is expected to raise key interest rates at least three times by at least 50 basis points in the coming months, in an effort to throw cold water on demand and rein in rising prices. read more

The US Senate on Friday confirmed Jerome Powell for a second term as Fed chairman.

The move “was widely expected and it opens the door for the Fed to continue to fight 40-year inflation, with many more rate hikes likely this year,” Detrick added.

Inflation

Geopolitical tensions surrounding Russia’s war on Ukraine were fueled by Finland’s announcement that it would apply for NATO membership, with Sweden expected to follow suit. The Kremlin promised to retaliate. read more

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, May 11, 2022. REUTERS/Brendan McDermid

The conflict, described by Russian President Vladimir Putin as a “special military operation,” has fueled inflation by putting pressure on global energy and grain supplies.

The Dow Jones Industrial Average (.DJI) fell 103.81 points, or 0.33%, to 31,730.3, the S&P 500 (.SPX) lost 5.1 points, or 0.13%, to 3,930.08 and the Nasdaq Composite (.IXIC) added 6.73 points, or 0.06% to 11,370.96.

Six of the 11 major sectors of the S&P 500 ended the day on a positive note, with healthcare (.SPXHC) gaining the largest percentage gain.

Utilities (.SPLRCU) and technology stocks (.SPLRCT) suffered the biggest losses.

Earnings season is nearing its final stretch, and according to the most recent data, 79% of S&P 500 companies that have posted results delivered better-than-expected earnings, Refinitiv said.

Analysts are now seeing overall S&P 500 earnings growth for the first quarter of 11%, up 6.4% at the end of the quarter, per Refinitiv.

Shares of luxury accessories company Tapestry Inc (TPR.N) rose 15.5% after expressing confidence in a rebound in Chinese demand once COVID restrictions are lifted. read more

Beyond Meat Inc (BYND.O) fell 4.2% after the plant-based food maker reported huge quarterly losses. read more

Twitter Inc lost 2.2%. The chief executive officer announced a layoff and the departure of two of its leaders amid Elon Musk’s takeover bid. read more

The number of declining issues surpassed those advancing on the NYSE by a ratio of 1.15 to 1; on Nasdaq, a 1.15-to-1 ratio favored the advanced.

The S&P 500 posted 1 new 52-week highs and 74 new lows; the Nasdaq Composite posted 6 new highs and 1,317 new lows.

Volume on US stock exchanges was 16.17 billion shares, compared to the average of 13.03 billion over the past 20 trading days.

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Reporting by Stephen Culp; additional reporting by Devik Jain and Amruta Khandekar in Bengaluru; Editing by Chizu Nomiyama and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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