- The consumer price index rose to 1% in May from 0.3% in April
- Netflix falls after Goldman Sachs downgrades to “sell”
NEW YORK, June 10 (Reuters) – US stocks ended sharply on Friday, marking their biggest weekly decline since January as sharper-than-expected increases in US consumer prices in May fueled investors’ concerns about more aggressive increase in interest rates by the Federal Reserve.
Shares of technology and growth, whose estimates rely more on future cash flows, led to the decline. Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O) were among the biggest weights of the S&P 500 and Nasdaq.
Following the inflation report, the 10-year reference yield on US government bonds reached 3.152%, the highest since May 9.
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A report by the US Department of Labor showed that the consumer price index (CPI) rose 1.0% last month, after rising 0.3% in April. Economists polled by Reuters predicted that the monthly CPI would rise by 0.7%.
On an annual basis, the CPI grew by 8.6%, the largest increase since 1981 and after a jump of 8.3% in May. Read more
Trader trades on the New York Stock Exchange (NYSE) in Manhattan, New York, USA, May 20, 2022. REUTERS / Andrew Kelly
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Shares were volatile this year, with recent sales largely tied to uncertainty about inflation and interest rate prospects.
“Inflation over the past month has certainly been hotter than expected, and a reminder that inflation will be with us longer than we expected before,” said Michael Sheldon, chief investment officer at RDM Financial Group in Hightower, Westport, Connecticut.
“But there are some signs in the economy that inflation should eventually start to slow and the Fed is likely to do whatever it takes to keep raising interest rates and cutting inflation for the next 12 to 18 months.”
According to preliminary data, the S&P 500 (.SPX) lost 117.05 points, or 2.91%, to finish at 3900.77 points, while the Nasdaq Composite (.IXIC) lost 415.07 points, or 3.53%, to 11,339.16. The Dow Jones Industrial Average (.DJI) fell 882.47 points, or 2.73%, to 31,395.72.
The inflation report was published ahead of the expected second increase in interest rates by 50 basis points from the Fed next Wednesday. An additional half a percentage point is estimated for July, with a high chance of such a move in September.
Netflix Inc (NFLX.O) fell after Goldman reduced the shares of the streaming giant to “sell” from “neutral” due to a possibly weaker macro environment.
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Additional reports by Devik Jain, Mehnaz Yasmin and Shreyashi Sanyal in Bengaluru; Edited by Arun Koyur, Aditi Sony and Jonathan Oatis
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