Ahead of Inflation Data S&P 500 Plunges 2.5%. Nasdaq Down 2.8%

Barry Adams
09 Jun, 2022
New York City

Stock market indexes plunged ahead of key inflation data on Friday. 

The S&P 500 index declined 2.4% to 4,017.82 and the Nasdaq Composite index fell 2.8% to 11,754.23.

Market indexes opened slightly lower and held below the flat line for the most part. 

However, investors grew nervous ahead of the consumer price index report tomorrow and selling began in earnest in the final thirty minutes of trading. 

Tech stocks, casino operators, and Chinese companies came under heavy pressure. 

Meta Platforms plunged 6.5%, Microsoft declined 2%, Apple Inc fell 3.6%, and Google parent Alphabet dropped 2%. 

Las Vegas Sands dropped 5.6% and MGM Resort International declined 3%. 

Oil prices dipped 88 cents and closed at $121.22 but natural gas prices rose 25 cents to $8.94 a unit. 

The yield on 10-year Treasury notes increased a fraction to 3.044%. 

The European Central Bank said it plans to lift rates at its next meeting on July 1 and lower economic growth outlook.

After the meeting of the Governing Council, the central bank said it plans to lift rates by 25 basis points at its next meeting in July and expects additional hikes at the September meeting.

The euro declined after the announcement but managed to rebound 0.5% by mid-day trading and the yield on 10-year German Bund increased to 1.41%.

For now the main lending rate from the ECB was held at 0.00%, marginal lending rate at 0.25%, and bank deposits with the central bank earned -0.5%.

Annual consumer price inflation jumped to a 4-decade high of 8.1% in May, and rate hikes of 15 basis points are likely to have no or minimal impact on inflationary pressures.

The ECB revised higher its 2022 inflation estimate to 6.8% from the previous estimate of 5.1% and lowered economic growth estimate to 2.8% from the 3.7% estimate in March.

The central bank also lowered 2023 and 2024 growth estimates and said inflation pressures are likely to subside in the next two years but are expected to remain above its 2% target rate in 2023.

The ECB last hiked rates in 2011 and the central bank has kept deposit rates in negative territory since 2014.

Initial jobless claims in the week ending on June 4 rose more than expected and the 4-week average also climbed.

Initial claims increased 27,000 to 229,000 from the revised 222,000 claims in the prior week.

The 4-week average also edged up 8,000 to 215,000 from the previous week's revised average of 207,000.

Five Below plunged 1.38% to $133.57 after the discount retailer reported weaker than expected earnings and lowered its outlook for the second quarter and full-year.

Signet Jewelers rose 9% to $67.83 after the largest jewelry chain reported 9% increase in sales and reaffirmed its annual sales and earnings outlook. 

Target Corporation fell 1.4% $154.54 after the retailer lifted its dividend despite the recent inventory challenges and weakening profit outlook.

Target declared a quarterly dividend of $1.08 per common share, a 20% increase from the prior quarterly dividend of 90 cents.

The dividend is payable Sept. 10, 2022 to shareholders of record at the close of business August 17, 2022.