The U.S. stock market ends the trading week on a minor note amid record inflation data. Investors’ long-awaited statistics showed a stronger rise in consumer prices, which rose in May by 8.6% year-on-year for the first time since 1981. At the same time, consumer sentiment was at an all-time low.
The Dow Jones catapulted 2.73%
Twenty-nine of the thirty stocks in the major stock benchmark closed negative. Only Walmart (WMT) +0.56% managed to remain a bright spot in this bearish feast of life. The S&P broad market index fell 2.91%. And DocuSign (DOCU) shares -24.53%, which renewed its 52-week low, helped the Nasdaq Composite technology companies indicator close the last business day of the current week with a loss of 3.54%.
Traders on the NYSE are already preparing for Jerome Powell’s speech. Photo: Bloomberg
On a weekly basis, DJI lost 4.58%, while the S&P and Nasdaq lost more than 5.05% and 5.6%, respectively. This is the tenth negative week of the last eleven for the Dow, and the ninth of ten for the other benchmarks. This is the worst index performance since January. Investors’ hopes are getting farther and farther away from the still recent highs. On the broad market index, they are now visible only from a distance of nearly 20%.
Inflation has been and remains a sword of Damocles for economists, politicians and the American public this year. Rising prices are constantly threatening to put pressure on consumer spending, which is a key driver of economic activity in the United States, writes Yahoo Finance.
For investors, inflation is a key determinant of the Fed’s future monetary policy, which will continue to raise interest rates next week. But the regulator’s hawkish actions won’t just put pressure on rising prices. The policy of raising rates automatically increases the cost of borrowing, and thus makes it harder for U.S. companies to do business. And the decline in business activity will eventually affect GDP and increase the chance of recession.
Investors meet inflation
Whatever we don’t assume for tomorrow, investors are voting with their money on what happens today. The threat of declining economic activity and an impending recession is forcing stock sales across the spectrum. Shares of the world’s most valuable company, Apple (AAPL), are down 3.86%. Amazon (AMZN) and Netflix (NFLX) are down more than 5%. Microsoft (MSFT and Alphabet (GOOG) lost 4.4% and 3%, respectively.
Major chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) are down 5.95% and 4%, respectively. The largest banking corporations Goldman Sachs (GS) -5.65% and JPMorgan Chase (JPM) -4.59% are also in the index outsiders. A little better than the market, if such expression is appropriate now, shares of representatives of the oil sector. The big American trio of ExxonMobil (XOM), Chevron (CVX) and ConocoPhillips (COP) finished the trading with losses of 1.2% – 1.8%, while the leader even remained in the plus for the week.
This may have been influenced by oil prices, which, in a sense, held the principle level of $120 per barrel. West Texas benchmark WTI futures ended trading at $120.47 and North Sea benchmark Brent at $121.93%. It’s remarkable and surprising that investors burning in U.S. stocks suddenly remembered gold. It had long seemed to me that the crazy fashion for cryptocurrency had put the final cross on it. Nevertheless, the eternal metal added 1.2% and reached the price of $1875 for 100 troy ounces.
Italian banking groups UniCredit (UCG) -9% and Intesa Sanpaolo (ISP) -7.38% reported the largest losses at European sites. French technology company Atos (ATO) became “lighter” -8.53%. British mining concern Anglo American (AAL) -7.46% and German industrial conglomerate Thyssenkrupp (TKA) -6.61% round out Europe’s top five fallers.
Now the attention on Fed policy will be even stronger
we wait for the Fed meeting
Next week its next meeting will take place. It is unlikely that the regulator will change its plan to raise by 0.5%. But the odds of that happening in September are much higher. So has the likelihood of a longer borrowing cycle itself. But Jerome Powell, the chairman of the U.S. Central Bank, will tell us more about that than anyone else. All we have to do is wait and hear.