Market Snapshot: Dow books worst 5-day losing streak since 2020 as hot inflation reading weighs on Wall Street

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Major stock indexes were near session lows in afternoon action, following an eagerly awaited consumer price index reading that showed U.S. inflation slowed less than anticipated in April.

How are stock indexes trading?

The Dow Jones Industrial Average
DJIA,
-0.10%

fell 215 points, or 0.7%, to 31,949 after swinging between gains and losses after the opening bell.

The S&P 500
SPX,
-0.55%

shed 46 points, or 1.2%, to 3,954.

The Nasdaq Composite
COMP,
-2.01%

fell 296 points, or 2.5%, to 11,445.

On Tuesday, the Dow industrials fell 0.3% to close at 32,160.74, a fourth straight day of losses that marked its largest four-day percentage decline since the stretch ending Oct. 29, 2020. The S&P 500 snapped a three-day losing streak with a gain of 0.2%, while the Nasdaq Composite advanced 1%.

What’s driving markets?

Stock were near session lows in afternoon trade, after data showed April consumer prices rose at an 8.3% annual pace, slowing from a more-than-40-year high of 8.6% in March. But it was above the 8.1% pace expected by economists surveyed by The Wall Street Journal and underscored that inflation continues to run at a torrid pace.

However, the so-called core rate of inflation, which omits food and energy, rose by a somewhat stronger 0.6%. Wall Street had forecast a 0.4% increase. The increase in the core rate over the past year also slowed to 6.2% from from a 40-year high of 6.5% in March.

“It’s possible that inflation data may have already witnessed a peak, and that places policymakers in a conundrum (to say nothing of the pain endured by U.S. households due to higher costs; particularly those in lower- to middle-income segments) and suggests that a retrospective review of policy will someday be warranted,” Rick Rieder, BlackRock’s chief investment officer of global fixed income, wrote in emailed comments.

“The question is how aggressive the central banks will want to be to try to [rein] inflation in through higher interest rates and reduced system-wide liquidity,” he wrote.

The data only reinforces expectations for the Fed to continue on an aggressive path of rate hikes and policy tightening.

“Wednesday’s CPI data once again surprised to the upside and the market now expects the Federal Reserve to hike interest rates by another 190 basis points by the end of 2022,” said Nancy Davis, founder of Quadratic Capital Management and portfolio manager of the Quadratic Interest Rate Volatility and Inflation Hedge Exchange-Traded Fund
IVOL,
-0.67%
,
in emailed comments.

“Investors need to keep in mind that the Federal Reserve’s aggressive forward guidance has already moved the interest rates markets and it is failing to control realized inflation,” she said.

Opinion: The Fed doesn’t deserve all of the blame for this inflation surge

Energy stocks were up 1.4%. Oil futures jumped, with the U.S. benchmark
CL.1,
+5.80%

up more than 6% after reports that COVID cases were easing in Beijing and Shanghai, driving hopes for an easing of restrictions and pressure on the global economy.

Read: Ukrainians make gains in east, as country halts Russian gas at one hub

Separately, data showed China’s consumer-price index rose 2.1% in April from a year earlier, picking up from March’s 1.5% increase.

Treasury yields were mixed after the data, with that of the 10-year note
TMUBMUSD10Y,
2.924%

down 6 basis points near 2.94%. Rates volatility has led to a brutal start to the year for fixed income investors, putting total returns deeply in the red for most asset classes.

Read: Corporate America’s debt sinks to lowest prices since 2008. Could it be a canary in the coal mine?

Which companies are in focus?

Duke Realty Corp.
DRE,
+8.51%

shares were up 7.6% after the company called the latest buyout offer from Prologis Inc.
PLD,
+0.37%

insufficient.

Moderna Inc.
MRNA,
-5.09%

on Wednesday said its chief financial officer had departed the company just two days after taking up the position, following the disclosure of an internal probe into financial reporting at his former employer. Shares fell 6%.

Coinbase Global Inc.
COIN,
-25.34%

shares fell almost 30% as the crypto trading app reported worse-than-forecast revenue on declining volume.

Rivian Automotive Inc.
RIVN,
-12.42%

shares fell about 12% after Ford Motor Co.
F,
-2.28%

disclosed in a Form 4 filing late Tuesday that it sold 8 million of the electric vehicle maker’s shares in the open market on May 9, at a price of $26.80, to raise $214.4 million. Rivian’s stock had tumbled 20.9% to a record low of $22.78 on May 9, after CNBC had reported over the weekend that Ford was planning to sell 8 million Rivian shares. Ford shares were off 3.3% lower.

Switch Inc.
SWCH,
+9.25%

stock rose 9.3% on news that DigitalBridge Group Inc.
DBRG,
+3.21%

has offered to buy the technology group in a cash deal valued at $11 billion.

Perrigo PLC
PRGO,
+5.04%

shares rose 5.2%, despite the personal self-care product maker swinging to a first-quarter loss, missing estimates.

Krispy Kreme Inc.
DNUT,
+5.00%

shares rose 4.9% after the doughnut seller reported forecast-beating profit and revenue and affirmed its full-year outlook.

How are other assets trading?

Gold futures 
GC00,
+0.57%

rose 0.7% to settle at $1,858.70 an ounce.

The Stoxx Europe 600 
SXXP,
+1.74%

rose 1.7%, while London’s FTSE 100 
UKX,
+1.44%

advanced 1.4%.

The Shanghai Composite 
SHCOMP,
+0.75%

r ose 0.7%, while the Hang Seng Index
HSI,
+0.97%

gained 0.9% and Japan’s Nikkei 225 
NIK,
+0.18%

 was up 0.1%.

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