May 19, 2022

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Stocks turn red in choppy session, yields fall after US inflation data

Stocks turn red in choppy session, yields fall after US inflation data

NEW YORK/MILAN (Reuters) – Wall Street stocks fell sharply, along with Treasury yields, in a volatile session on Wednesday, as oil prices soared and investors worried about the prospect of an economic slowdown.

US stock indices moved up and down after US data showed higher-than-expected core inflation, excluding items such as oil prices. Some investors were encouraged by the change in annual consumer price growth to 8.3% in April from 8.5% in March although it was above analysts’ estimate of 8.1%. Read more

Likewise, bond yields rose immediately after the report before reversing course. Trading in the US dollar was also choppy.

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“This is all about recession concern. The inflation numbers we got this morning weren’t good, worse than expected…There is a rise in food prices and growing concerns that inflation numbers are going to be flat on the high side,” said Tim Greske. , chief portfolio strategist at Ingalls & Snyder.

The strategist also pointed to a flat yield curve, citing the difference between long- and short-term Treasury yields as an ominous sign.

“We have a very flat yield curve that has tended to invert. This scares traders about the prospects of a recession. There are a lot of investors who think the Fed can engineer a smooth landing. And that looks increasingly doubtful.”

Dow Jones Industrial Average (.DJI) The index fell 154.12 points, or 0.48%, to 32006.62 Standard & Poor’s 500 (.SPX) It lost 38.97 points, or 0.97%, to 3,962.08 points, and the Nasdaq Composite (nineteenth) It fell 293.74 points, or 2.5%, to 11,443.93 points.

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Nasdaq has fallen behind its peers as interest rate sensitive growth sectors, technology (.SPLRCT) and consumer appreciation (.SPLRCD)Its performance was lower than the rest of the market.

Earlier, Jim Poulsen, chief investment analyst at The Leuthold Group in Minneapolis, said markets sounded emotional.

“At the end of the day, we can all get excited about whether it’s a little higher or a little lower but the annual inflation rate has clearly flipped and appears to have peaked in March. It looks like it’s rounded a corner,” he said.

After the pan-European STOXX 600 index (.stoxx) It closed up 1.74%, the MSCI gauge for stocks around the world (.MIWD00000PUS) fall 0.38%. On Tuesday, the global index fell to its lowest level since December 2020 amid concerns that the Fed’s tightening could slow down the global economy significantly.

The dollar index initially rose after the inflation news, then declined, but rose slightly in late trading.

In early trade, 10-year Treasury yields fell to their lowest levels in nearly a week. But after inflation data returns to a three-year high of 3.203% hit on Monday.

Yields have since lost some of their gains with the benchmark 10-year note rising 19/32 to produce 2.9187%, down from 2.993% late Monday. The price of the 30-year bond has risen in the past 48/32 to 3.042% from 3.129%.

The two-year bond rate fell 1/32 to 2.633% from 2.623%.[nL2N2X31IH]

The Fed last week raised interest rates by 50 basis points, and Bank Chairman Jerome Powell said there are likely to be two more such increases at upcoming policy meetings. There was also market speculation that the US central bank would need to move 75 basis points in one meeting.

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Oil prices jumped after falling in the previous two sessions, buoyed by supply concerns as Russian gas flows to Europe declined and the European Union worked to win support for a Russian oil embargo.

US crude oil futures settled at $105.71 a barrel, up $5.95, or 5.96%, while Brent crude futures settled at $107.51 a barrel, up $5.05, or 4.93%.

And the spot gold price rose 0.7 percent to $ 1851.45 an ounce.

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Additional reporting by Sinad Karo in New York, Danilo Masoni in Milan, Sujata Rao in London and Alun John in Hong Kong; Editing by William MacLean, Thomas Janowski, Angus McSwan and David Gregorio

Our criteria: Thomson Reuters Trust Principles.