US stocks end mixed after another day of erratic trading

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The stock market ended another erratic day of trading with mixed results as investors grapple to understand what’s next with inflation and the U.S. central bank’s response to it

May 12, 2022, 8: 47 PM

5 min read

NEW YORK — Another erratic day of trading on Wall Street ended with an uneven finish for the major stock indexes Thursday, after the market reversed most of an early slide in the final hour of trading.

The S&P 500 closed only 0.1% lower after having been down 1.9% earlier in the day. The Dow Jones Industrial Average dropped 0.3% while the Nasdaq gained 0.1%.

Wall Street trading has been volatile. Indexes are prone to sharp swings within a day or less as investors attempt to protect their portfolios against the impact of high inflation and rising interest rates, as the Federal Reserve attempts to control surging prices.

Another dire readout on inflation sparked a wave of selling early Thursday, with technology stocks weighing down the S&P 500 index the most. Despite solid gains during the pandemic, due to a shift to shopping online and working from home, the sector has seen sharp declines as inflation rises and interest rates go higher. Apple and chipmaker Nvidia both fell 2.7%, while Microsoft dropped just 2%.

” The pullback in tech growth stocks has been dramatic,” said Brian Price of Commonwealth Financial Network’s investment management team. “We have a reckoning that we may have gone too far too quickly” with many of those stocks.

The S&P 500 fell 5. 10 points to 3,930.08. The Dow dropped 103. 81 points to 31,730.30. The Nasdaq rose 6. 73 points to 11,370.96. All indexes are on track for sharp weekly declines, which has extended the market’s slump this year. The benchmark S&P 500 is now down 17.5% this year, while the Nasdaq is down 27.3%.

Small company stocks performed better than the rest. The Russell 2000 rose 21. 24 points, or 1.2%, to 1,739.38.

The yield on the 10-year Treasury fell to 2. 87% from 2.92%.

The Labor Department on Thursday reported that wholesale prices soared 11% in April from a year earlier. As companies attempt to cover higher costs, many wholesale costs are being passed on to consumers. This has raised concerns about a possible pullback in spending, which could impact economic growth.

Inflation pressure has been building for consumers. Wall Street was expecting a hotter report from the Labor Department on Wednesday’s consumer prices. It also showed a larger increase in prices other than gasoline than was expected, which economists call “core inflation”. This can be more predictive of future trends.

Rising inflation has prompted Federal Reserve to raise its benchmark short-term rate from its record low of near zero. This was where it spent most time during the pandemic. It also indicated that it may increase rates by twice the usual amount at its upcoming meetings. Investors worry that the central bank could trigger a recession by raising rates too fast or too high.

Inflation has been worsened by Russia’s invasion of Ukraine and the conflicts impact on rising energy prices. China’s recent lockdowns amid concerns about a COVID-19 resurgence have also worsened supply chain and production problems at the center of rising inflation. The global impact of rising prices on consumers has been immense. Britain reported that its economy grew at the lowest rate in a year during the quarter ended Thursday. This raises concerns that the country could be heading for a recession.

Investors are closely watching the latest round of corporate earnings as they evaluate how companies and industries handle inflation pressure. After missing analysts’ predictions in its latest earnings report, entertainment giant Disney fell 0.9%. Coach and Kate Spade owner Tapestry jumped 15.5% for the biggest gain in the S&P 500 after reporting strong financial results. We’ll continue to listen to the Fed’s statements, but it’s worth paying attention to company outlooks during earnings calls,” Price stated. “That’s something that investors will focus more and more on as we go into the second half of the year, how durable are company earnings.”

Health care companies and retailers were among the market’s gainers Thursday. Pfizer gained 2.8%, and Home Depot gained 2.4%.

Bitcoin was caught up in the selling. The digital currency was down 2.9% to $28,551 in late afternoon trading late, according to CoinDesk. Only six months ago it was over $66,000.


Veiga reported from Los Angeles.

ABC News

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