Stocks decline after hot inflation report

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Stocks traded lower Thursday morning as a sell-off on Wall Street continued to push the S&P 500 to its lowest level in more than a year and on the verge of bear market territory.

The Dow Jones Industrial Average shed 190 points, or 0.6% following five straight days of losses, while the S&P 500 declined 0.86% after the benchmark closed at its lowest level since March 2021 in the prior session. The Nasdaq Composite declined 1.1% as tech shares remained at the epicenter of the selling during this risk-off period.

“Stocks are for sale in all corners of the globe, and the market tone is increasingly dour,” said Adam Crisafulli of Vital Knowledge in a note.

Tech stocks continued to take a beating on Thursday. Apple lost more than 3% as shares veered into bear market territory and traded 22% off a 52-week-high. It came as Saudi Aramco surpassed the tech giant as the world’s most valuable company on Wednesday.

Tech stocks Amazon and Microsoft also continued their fall on Thursday, dipping 2% each. Salesforce dropped 3.6%.

On the earnings front, Disney shares dragged down the Dow, falling more than 5% after reporting mixed earnings results. The media giant reported higher-than-expected streaming subscriber growth, but warned about the Covid impact on parks in Asia. Boeing and American Express also weighed on the Dow, shedding about 4% each.

Meanwhile, Honeywell, Amgen, Walmart and Home Depot gained about 1% as investors continued their shift into safety areas such as healthcare and consumer staples.

Fresh data on the producer price index on Thursday, which measures prices at the wholesale level, did little to shake fears of rising inflation.

In regular trading Wednesday, the Dow fell 326 points, or 1.02%. The S&P 500 slipped 1.65% and the Nasdaq Composite dropped 3.18%. The S&P 500 is now more than 18% off its high and down more than 17% since the start of the year. The Nasdaq Composite is already nearly 30% off its high.

The latest inflation data on Wednesday showed consumer prices in April jumped 8.3%, higher than expected and still running close to a 40-year high of 8.5%. The report caused investors to continue to sell risky assets like tech stocks and bitcoin.

On the earnings front, Rivian Automotive added 8% and Beyond Meat slumped more than 13% on Thursday following quarterly results.

Bitcoin plunged below $27,000 overnight Thursday from inflation fears and the collapse of controversial stablecoin TerraUSD. Tech companies with bitcoin holdings declined in the premarket. Tesla lost 2%, while MicroStrategy fell 10%.

“US Equity markets remain under heavy pressure with classic “risk off” correlations now emerging, i.e. falling bond yields and JPY strength,” wrote Credit Suisse’s David Sneddon.

Even as the sell-off gains steam, Tom Lee of Fundstrat remains bullish on stocks. He said if the market finds its footing “we’re in a world of double digit expected returns.”

“This week is interesting because the stock market declines have accelerated downwards, so the waterfall is accelerating but things that normally would corroborate a waterfall decline like yields or the VIX have not been,” Lee told CNBC’s “Closing Bell: Overtime.” “The bond market’s actually been pretty stable even in the face of a hot CPI and the VIX actually has been falling.”

He noted that of the 16 times since 1940 that the market has declined 16% in a four-month period, it was higher six months later in 12 of those events.



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