Home ›› 13 Jun 2022 ›› Stock
US stocks posted their biggest weekly percentage declines since January and ended sharply lower on the day Friday as a steeper-than-expected rise in US consumer prices in May fueled fears of more aggressive interest rate hikes by the Federal Reserve.
Tech and growth stocks, whose valuations rely more heavily on future cash flows, led the decline. Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O) and Apple Inc (AAPL.O) drove losses in the S&P 500.
Following the inflation report, two-year Treasury yields , which are highly sensitive to rate hikes, spiked to 3.057 per cent, the highest since June 2008. Benchmark 10-year yields reached 3.178 per cent, the highest since May 9.
The US Labor Department's report showed the consumer price index (CPI) increased 1.0 per cent last month after gaining 0.3 per cent in April. Economists polled by Reuters had forecast the monthly CPI picking up 0.7 per cent.
Year-on-year, CPI surged 8.6 per cent, its biggest gain since 1981 and following an 8.3 per cent jump in May. read more
Stocks have been volatile this year, and recent selling has largely been tied to worries over inflation, rising interest rates and the likelihood of a recession.
"Today's report should extinguish any pretense that a 'pause' in rate hikes will likely be appropriate by the end of summer, as the Fed is clearly still behind the eight ball on bringing inflation under control," said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
The Dow Jones Industrial Average (.DJI) fell 880 points, or 2.73 per cent, to 31,392.79; the S&P 500 (.SPX) lost 116.96 points, or 2.91 per cent, to 3,900.86; and the Nasdaq Composite (.IXIC) dropped 414.20 points, or 3.52 per cent, to 11,340.02.
The major indexes registered their biggest weekly percentage drops since the week ended Jan. 21, with the Dow down 4.58 per cent, the S&P 500 down 5.06 per cent and the Nasdaq down 5.60 per cent for the week.
The S&P 500 is now down 18.2 per cent for the year so far.
