Wall Street comes to fear that inflation will force more Fed tightening

  • Non-farm payrolls increase by 428,000 in April
  • Under Armor tumbles on bleak 2023 earnings outlook
  • Coinbase has fallen to the lowest level since its market debut
  • Indices down: Dow 0.3%, S&P 500 0.57%, Nasdaq 1.40%
  • The Nasdaq recorded the lowest closing level since 2020

May 6 (Reuters) – Major Wall Street indexes extended losses on Friday as investors feared the Federal Reserve would have to be more aggressive than expected in raising interest rates to fight inflation.

The tech-heavy Nasdaq posted its lowest close since 2020, posting a fifth consecutive weekly loss, its longest losing streak since the fourth quarter of 2012. The S&P 500 also posted its fifth consecutive weekly loss, its longest streak of weekly losses since the second. quarter of 2011.

“Currently, 95% of market drivers are long-term interest rates,” said Jay Hatfield, founder and managing director of Infrastructure Capital Management in New York.

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The Labor Department presented stronger-than-expected jobs data, with nonfarm payrolls rising by 428,000 jobs in April, versus an expected 391,000 job additions, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter. Read more

The unemployment rate remained unchanged at 3.6% over the month, while the average hourly wage rose by 0.3% against a forecast increase of 0.4%.

Nine of the 11 major S&P sectors fell. Energy (.SPNY) gained 2.9% as oil prices rose on supply issues.

“Oil is up again, continuing the inflation concerns we are seeing and energy is bucking the trend of a very weak market. But higher natural gas and crude oil prices have been a tailwinds for the energy sector this year,” said Ryan Detrick, chief market strategist for LPL Financial.

Megacap growth stocks slid, with a few exceptions including Apple Inc (AAPL.O), which rose 0.5%. Wells Fargo & Co (WFC.N) fell 0.5% to lead losses among major banks.

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., May 5, 2022. REUTERS/Andrew Kelly

The Dow Jones Industrial Average (.DJI) fell 98.6 points, or 0.3%, to 32,899.37, the S&P 500 (.SPX) lost 23.53 points, or 0.57%, to 4,123.34 and the Nasdaq Composite (.IXIC) fell 173.03 points, or 1.4%, to 12,144.66.

Most traders are expecting a 75 basis point hike at the US central bank’s June meeting, despite the exclusion of Fed chief Jerome Powell. find out more RIPR

All eyes are on the monthly Consumer Price Index inflation report on Wednesday, as investors seek clues as to whether the economy is approaching an inflation peak.

Under Armor Inc (UAA.N) fell 23.8% after the sportswear maker forecast negative profit for fiscal 2023. Shares of rival Nike Inc (NKE.N) also slid. Read more

Coinbase Global Inc (COIN.O) fell 9% on Friday to the lowest level since the cryptocurrency exchange debuted in 2021.

Volume on U.S. exchanges was 13.49 billion shares, compared to an average of 12.10 billion for the full session over the past 20 trading days.

Falling issues outnumbered rising ones on the NYSE by a ratio of 2.49 to 1; on the Nasdaq, a ratio of 3.04 to 1 favored the decliners.

The S&P 500 posted a new 52-week high and 63 new lows; the Nasdaq Composite recorded 15 new highs and 799 new lows.

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Reporting by Echo Wang in New York; Additional reporting by Devik Jain in Bengaluru; Editing by Shinjini Ganguli, Anil D’Silva and Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.

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