US stocks end sharply lower after red-hot inflation report
Wall Street ended sharply lower on Thursday after United States consumer prices data came in hotter than expected and subsequent comments from a Federal Reserve official raised fears that the US central bank will hike rates aggressively to fight inflation.
US Labor Department data showed consumer prices surged 7.5 percent last month on a year-over-year basis, topping economists’ estimates of 7.3 percent and marking the biggest annual increase in inflation in 40 years.
US stocks fell further after Federal Reserve Bank of St. Louis President James Bullard said the data had made him “dramatically” more hawkish. Bullard, a voting member of the Fed’s rate-setting committee this year, said he now wanted a full percentage point of interest rate hikes by July 1.
“Inflation tends to be kryptonite to valuations. Higher inflation causes multiples to compress, and that’s what we’re experiencing right now,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.
“Volatility is likely to remain until the number and magnitude of Fed rate hikes is better known.”
Within minutes of Bullard comments, rate futures contracts were fully pricing an increase in the Fed’s target range for its policy rate to 1 to 1.25 percent by the end of its policy meeting in June, with some bets on an even steeper rate hike path.
Megacap growth stocks Tesla Inc, Nvidia, and Microsoft each lost about 3 percent.
The Dow Jones Industrial Average fell 1.47 percent to end at 35,241.59 points, while the S&P 500 lost 1.81 percent to end at 4,504.06.
The Nasdaq Composite dropped 2.1 percent to 14,185.64. It was the seventh time in 2022 that the Nasdaq lost more than 2 percent in a session.
The S&P 500 is now down about 5 percent in 2022, and the Nasdaq is down about 9 percent.
All of the 11 S&P 500 sector indexes declined, with technology down 2.75 percent and real estate down 2.86 percent, leading the way lower.
Meanwhile, US companies continued to report upbeat quarterly results. With 78 percent of the S&P 500 companies that have reported results beating analysts’ profit estimates, according to Refinitiv data. Read More…
