Volatile S&P 500 and Nasdaq Closed Lower Lacking Support

Barry Adams
19 May, 2022
New York City

Stocks after a day of roller coaster trading failed to close higher and dropped in the final thirty minutes of trading. 

Fear dominated financial markets for the second day in a row and indexes lost ground as the S&P 500 teetered near bear territory in the early trading.

The indexes managed to rise above the flat-line four times but lacked support only to quickly dip in the negative. 

The S&P 500 dropped 0.6% to 3,900.72 and the Nasdaq Composite decreased 0.3% to 11,388.51. 

Crude oil jumped 2.7% $112.23 a barrel and the yield on 10-year U.S. Treasury notes decreased to 2.886%

The benchmark bond yields rose in seven of the last nine trading days and weekly jobless claims increased for the third week in a row. 

Elevated crude prices drove the market sentiment and investors feared that persistent high energy prices will dampen economic activities and lower corporate earnings. 

Investors sold stocks and feared that inflation is finally showing up in corporate results and more pain is likely to follow as the Fed prepares aggressive rate hikes that may tip the economy into a recession.  

The twin fears of future faster rate hikes and sustained inflation have been playing out over the last eight weeks and reached a new height on Wednesday. 

The earnings miss from Walmart and Target and cautious outlook from Lowe's fanned negative sentiment on Wednesday. 

Cisco declined 14% after the networking systems maker reported flat quarterly sales and guided revenues to decline in the current quarter on the account of parts shortages and supply chain disruptions. 

Kohl's dropped 7% after the general merchandise retailer reported a first quarter and comparable sales declined 5.2% and said adjusted earnings per share plunged 90% to 11 cents from $1.05 a year ago. 

BJ's Wholesale Club bucked the retail sector trend and rose 8% after the company reported latest quarter sales advanced nearly 10% and earnings jumped 38% on comparable store sales increase of 4.1% compared to a year ago. 

U.S. weekly jobless claims in the week ending on May 18 came in at 281,000, an increase of 21,000 from the previous week, the Labor Department said on Thursday. 

Existing home sales declined 2.4% in April, National Association of Realtors said today. Sales declined 5.9% from a year ago. 

Home sales declined for the third month in a row to a seasonally adjusted rate of 5.61 million. Home price increase slowed to 14.8% with median price of $391,200. 

"Higher home prices and sharply higher mortgage rates have reduced buyer activity," said Lawrence Yun, NAR's chief economist. 

"It looks like more declines are imminent in the upcoming months, and we'll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years."

The U.S. rout sparked a global market selloff and dragged indexes in Asia and Europe down between 1% and 2%. 

The DAX index in Frankfurt fell 0.9% to 13,882.09, the CAC-40 in Paris decreased 1.3% to 6,272.72, and the FTSE 100 index in London dropped 1.8% to 7,302.84. 

In Tokyo, the Nikkei index declined 1.9% to 26,402.82.

Tech and automakers led the decline in Tokyo and SoftBank Group fell 1.6% to 5,055.00 yen and Recruit Holdings Co fell 4.2% to 4,602.00 yen. 

Japan's trade deficit in April rose to 839.2 billion yen (about $7 billion) from the upwardly revised 414.1 billion in March. 

Imports were the largest since record keeping began in 1979. 

Japan recorded a monthly deficit for the ninth month in a row and swung from a surplus of 227 billion in April 2021. 

In Hong Kong, the Hang Seng Index fell 2.5% to 20,120.68, the largest decline since May 6. Hang Seng Tech index fell 4% but the Shanghai Composite Index gained 0.4%, the only gainer in Asian markets.