Nasdaq, S&P 500 retreat as rate hike fears equity rally

  • US producer prices fall in July, core inflation slows
  • Disney overtakes Netflix on streaming subscribers, shares jump
  • US weekly jobless claims rise for second straight week

NEW YORK, Aug 11 (Reuters) – The Nasdaq and S&P 500 tumbled to close lower on Thursday after realizing the Federal Reserve still needed to aggressively raise interest rates to fully rein in rising consumer prices despite further evidence of a slowdown in inflation.

The S&P 500 (.SPX) closed slightly lower after hitting new three-month highs following data showing the US Producer Price Index (PPI) unexpectedly fell in July.

The drop in the PPI raised bets in futures markets that the Fed would raise rates by 50 basis points in September instead of 75 basis points as expected earlier in the week. Read more

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The S&P 500 and Nasdaq jumped more than 2% on Wednesday after a weaker-than-expected consumer price reading. But policymakers have left little doubt that they will tighten monetary policy until inflationary pressures ease completely. Read more

As the labor market shows signs of slowing as the number of Americans filing new claims for unemployment benefits rose for the second straight week, the Nasdaq fell as investors questioned the strength of the stock market. ‘economy. Read more

“It was a better CPI print yesterday than expected and a better PPI print this morning than analysts expected. So that fits that theme, that spike in inflation came as the energy continues to decline,” said George Catrambone, Americas Trade Manager at DWS. Band. “But I would be concerned about a fake head.”

The Dow Jones Industrial Average (.DJI) rose 27.16 points, or 0.08%, to 33,336.67, while the S&P 500 (.SPX) slipped 2.97 points, or 0.07 %, to 4,207.27 and the Nasdaq Composite (.IXIC) fell 74.89 points, or 0.58%, to 12,779.91.

Volume on U.S. exchanges was 12.36 billion shares, compared to an average of 11.06 billion for the full session over the past 20 trading days.

Six of the 11 major S&P 500 sectors fell, with health care (.SPXHC) leading. Energy (.SPNY) rose 3.2% to lead the gains and helped value stocks (.IVX) rise 0.4% as growth stocks (.IGX) fell 0, 5%.

Banks (.SPXBK) extended their rally with Goldman Sachs (GS.N) and JPMorgan Chase & Co (JPM.N) up 1.1% and 1.5%, respectively.

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., August 8, 2022. REUTERS/Andrew Kelly

Benchmark US Treasury yields hit more than two-week highs as bond investors bet the Fed will continue to hike rates amid still-high inflation, although price pressures have eased somewhat .

Demand, shown by a nearly 9% increase in overall purchasing power, is still too strong and could lead the Fed to stay aggressive longer than many hope, said Jack Janasiewicz, chief portfolio strategist. at Natixis Investment Managers Solutions.

“We’re getting a little more worried because the Fed may have to do a little more work to try to cool that excess demand side of the equation,” Janasiewicz said.

High-growth stocks that rebounded on Wednesday fell, with Tesla Inc (TSLA.O) down 2.6% and Inc (AMZN.O) down 1.5%.

Despite its recent rebound from mid-June lows, the tech-heavy Nasdaq is down about 18% so far this year as fears of aggressive monetary policy have sapped appetite for stocks. stocks, especially high growth stocks.

The U.S. central bank has raised its benchmark rate by 225 basis points since March as it struggles to calm demand without triggering a sharp increase in layoffs.

In earnings-focused news, Walt Disney (DIS.N) jumped 4.7% as the media giant edged rival Netflix Inc (NFLX.O) with 221 million streaming customers and announced that would raise prices for customers who want to watch Disney+ or Hulu without ads. Read more

Bumble Inc (BMBL.O) fell 8.6% as it slashed its full-year revenue forecast, hit by war in Ukraine, while struggling with competition from rival Match Group Inc (MTCH .O) in the online dating market. Read more

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.54 to 1; on the Nasdaq, a ratio of 1.25 to 1 favored advancers.

The S&P 500 posted four new 52-week highs and 29 new lows; the Nasdaq Composite recorded 69 new highs and 22 new lows.

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Reporting by Herbert Lash, additional reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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