We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street closed lower on Wednesday after a key inflation data for June came in at a 41-year high. Market participants are highly concerned that the Fed will raise interest rate more aggressively to combat mounting inflation. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 0.7% or 1208.54 points to close at 30,772.79. Notably, 21 components of the 30-stock index ended in negative territory while 8 in green and 1 remained unchanged. At intraday low, the blue-chip index plunged 466 points.
The tech-heavy Nasdaq Composite finished at 11,247.58, sliding 0.2% due to weak performance of large-cap technology stocks. At intraday low, the tech-laden index down more than1.5%.
The S&P 500 fell 0.4% to end at 3,801.78. At intraday low, broad-market index down more than 2%. Two out of 11 broad sectors of the benchmark index closed in positive zone while nine ended in red. The Consumer Discretionary Select Sector SPDR (XLY) gained 0.8% while the Industrials Select Sector SPDR (XLI) and the Health Care Select Sector SPDR (XLV) fell 1.2% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 1.7% to 26.82. A total of 10.66 billion shares were traded Wednesday, lower than the last 20-session average of 12.56 billion. Decliners outnumbered advancers on the NYSE by a 1.37-to-1 ratio. On Nasdaq, a 1.08-to-1 ratio favored declining issues.
A Red Hot Inflation Data
The Bureau of Labor Statistics reported that the consumer price index (CPI) – popularly known as household inflation – increased 1.3% in June compared with 1.1% in May. The consensus estimate was 1%. Year over year, CPI jumped 9.1%, marking its highest monthly reading since November 1981.
The core CPI (excluding the volatile food and energy items) rose 0.7% in June compared with 0.6% in May. The consensus estimate was 0.6%. Year over year, core CPI climbed 5.9%. However, the metric peaked its highest in March at 6.5%. The key inflation data has been falling in the last three months.
The major source of CPI inflation was gasoline, prices of which appreciated 11.2% on monthly basis and soared nearly 60% year over year. Electricity costs advanced 1.7% monthly and 13.7% yearly. New and used vehicle prices increased 0.7% monthly and 1.6% yearly.
Investors are worried that the Fed will hike the benchmark lending rate more aggressively. After, the release of the June CPI data, the CME FedWatch data revealed that there is 80% probability that the central bank will raise interest rate by 1% in July FOMC meeting compared with a just 7.6% chances a day ago. The Fed has already given indication that it may raise interest rate by 75 basis points in July FOMC meeting.
Rising Recession Fears
On Jul 13, following the release of the CPI data, the yield on the 2-Year U.S. Treasury Note rose 9 basis points to 3.138% while the yield on the benchmark 10-Year U.S. Treasury Note fell 4 basis points to 2.919%. This was the fourth time this year that inversion between 2-year and 10-year yields happened. This yield inversion is generally known as the sign of an upcoming recession as the 2-year yield is more sensitive to recession data.
The U.S. economy contracted 1.6% in first-quarter 2022. The latest data of the Atlanta Fed’s GDPNow showed that the U.S. GDP is expected to decline 1.2% in second-quarter 2022. In financial literature, the contraction of GDP in two consecutive quarters is generally known as the sign of a recession.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Stock Market News for Jul 14, 2022
Wall Street closed lower on Wednesday after a key inflation data for June came in at a 41-year high. Market participants are highly concerned that the Fed will raise interest rate more aggressively to combat mounting inflation. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) dropped 0.7% or 1208.54 points to close at 30,772.79. Notably, 21 components of the 30-stock index ended in negative territory while 8 in green and 1 remained unchanged. At intraday low, the blue-chip index plunged 466 points.
The largest loser of the index was UnitedHealth Group Inc.(UNH - Free Report) , shares of which tumbled 2.6%. UnitedHealth Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 11,247.58, sliding 0.2% due to weak performance of large-cap technology stocks. At intraday low, the tech-laden index down more than1.5%.
The S&P 500 fell 0.4% to end at 3,801.78. At intraday low, broad-market index down more than 2%. Two out of 11 broad sectors of the benchmark index closed in positive zone while nine ended in red. The Consumer Discretionary Select Sector SPDR (XLY) gained 0.8% while the Industrials Select Sector SPDR (XLI) and the Health Care Select Sector SPDR (XLV) fell 1.2% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 1.7% to 26.82. A total of 10.66 billion shares were traded Wednesday, lower than the last 20-session average of 12.56 billion. Decliners outnumbered advancers on the NYSE by a 1.37-to-1 ratio. On Nasdaq, a 1.08-to-1 ratio favored declining issues.
A Red Hot Inflation Data
The Bureau of Labor Statistics reported that the consumer price index (CPI) – popularly known as household inflation – increased 1.3% in June compared with 1.1% in May. The consensus estimate was 1%. Year over year, CPI jumped 9.1%, marking its highest monthly reading since November 1981.
The core CPI (excluding the volatile food and energy items) rose 0.7% in June compared with 0.6% in May. The consensus estimate was 0.6%. Year over year, core CPI climbed 5.9%. However, the metric peaked its highest in March at 6.5%. The key inflation data has been falling in the last three months.
The major source of CPI inflation was gasoline, prices of which appreciated 11.2% on monthly basis and soared nearly 60% year over year. Electricity costs advanced 1.7% monthly and 13.7% yearly. New and used vehicle prices increased 0.7% monthly and 1.6% yearly.
Investors are worried that the Fed will hike the benchmark lending rate more aggressively. After, the release of the June CPI data, the CME FedWatch data revealed that there is 80% probability that the central bank will raise interest rate by 1% in July FOMC meeting compared with a just 7.6% chances a day ago. The Fed has already given indication that it may raise interest rate by 75 basis points in July FOMC meeting.
Rising Recession Fears
On Jul 13, following the release of the CPI data, the yield on the 2-Year U.S. Treasury Note rose 9 basis points to 3.138% while the yield on the benchmark 10-Year U.S. Treasury Note fell 4 basis points to 2.919%. This was the fourth time this year that inversion between 2-year and 10-year yields happened. This yield inversion is generally known as the sign of an upcoming recession as the 2-year yield is more sensitive to recession data.
The U.S. economy contracted 1.6% in first-quarter 2022. The latest data of the Atlanta Fed’s GDPNow showed that the U.S. GDP is expected to decline 1.2% in second-quarter 2022. In financial literature, the contraction of GDP in two consecutive quarters is generally known as the sign of a recession.