Indices saw no rebound during Friday’s late trading day after the highest inflation since 1981 sent the stock market to losses of more than 2%.
The S&P 500 fell 2.5% and the Dow Jones Industrial Average 2.2%. The Nasdaq composite was down 3.1% as the S&P technology sector had one of the worst sector performances, down nearly 3%. great techs Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOGL) fell but remained above their May low.
Financials also fell more than most other sectors due to concerns about the economy. Financial Select Sector SPDR (XLF) was down nearly 3% and was down more than 6% for the week.
Volume was lower on the Nasdaq and higher on the NYSE from the same time on Thursday.
Inflation peak reaches stock market
US stock market overview today
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Last update: 2:44 PM ET 6/10/2022
The consumer price index rose 8.6% in May from a year ago, up from 8.3% in April and 1% higher than the previous month. Core prices, excluding food and energy components, increased by 0.6% compared to April. Annual core inflation fell to 6% from 6.2% the previous month.
The Federal Reserve is expected to raise interest rates by 50 basis points during Wednesday’s meeting. Another half point increase is expected in July.
But Friday’s inflation report raised the likelihood of further gains of 50 basis points in the coming months. CME Group’s FedWatch shows high odds of at least a half-point gain during its June, July and September meetings, and slightly better than even chances of a half-point gain in November.
Also on Friday, the University of Michigan consumer confidence survey fell to 50.2 from 58.4 in May. Economists had expected 58.5.
Jeffrey Roach, chief economist at LPL Financial, said sentiment is at its lowest point since 1978 as consumers become increasingly concerned about future economic conditions. He sees the recession risks increasing for next year.
“We need to listen to what consumers are saying, but more importantly, we need to look at what consumers are doing,” Roach said in a note. “We expect a slowdown in consumer spending as inflation and uncertainties weigh heavily on sentiment.”
More leading stocks are breaking down
The Innovator IBD 50 ETF (FFTY) fell 2.6%. A pair of IBD 50 stocks received sell signals.
Linde (LIN) remained below the 200-day moving average, pushing it down from the 332.41 buy point to more than 7%. That results in a sell signal just over a week since the breakout of a flat base.
New fortress energy (NFE) fell below the 50-day moving average and is more than 13% below last week’s break at 49.40. The stock was removed from IBD Leaderboard today.
Favorite Ingredients (DAR) also fell below the 50-day line and has also triggered the loss-limiting sell line.
Original parts (GPC) is now more than 3% below the buy point of 141.21 from Thursday’s break. Beacon Roofing Supply also fell below its latest buy point. Neither stock has received sell signals so far.
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