S&P 500, Nasdaq Drop After Inflation Surges to New 4-Year High

Barry Adams
10 Jun, 2022
New York City

The selling on Wall Street accelerated after the latest reading on inflation showed no signs of easing of price increases. 

The S&P 500 index plunged 20.1% to 3,938.03 and the Nasdaq Composite index plunged 2.3% to 11,481.49. 

For the year, the S&P 500 has declined 17.99% and the Nasdaq Composite has fallen 27.5%. 

Consumer prices in May rose at a faster pace as energy price surge continued in the month. 

The Consumer Price Index increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the U.S. Bureau of Labor Statistics reported today. 

Over the last 12 months, the all items index increased 8.6% before seasonal adjustment, faster than 8.3% in the previous month. 

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy. 

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%. 

On a yearly basis, food prices surged 10.1%, energy prices 34.6%, and shelter cost rose 5.5%. 

In stock trading, technology, consumer goods makers, travel and entertainment stocks faced renewed selling. 

Microsoft declined 2.8%, Google parent Alphabet fell 2.4%, Apple dropped 2.7%, Meta Platforms traded down 2.7%, and Amazon plunged 3.7%. 

Las Vegas Sands declined 3.4%, Hyatt Hotels decreased 2.5%, Expedia Group dropped 3.7%, and Cheesecake Factory plunged 4%. 

Traders also reacted to the latest earnings news and brokerage rating revisions. 

Netflix Inc declined 4.9% to $192.77 after Goldman Sachs downgraded the streaming service provider's stock from "neutral" to "sell" and cut its price target to $186 from $265. 

The brokerage firm cited a number of reasons including lower investor's appetite for businesses with longer-term investment, rising competition, and declining new subscriber growth prospects in the U.S. 

Rent the Runway Inc jumped 7.7% to $3.80 after the online style provider said fiscal 2022 first quarter surged 100% to $67.1 million and net loss shrank 63% to $42.5 million. 

Active customers increased 70% to 177,200.  

Stitch Fix Inc dropped 16.04% to $6.53 following a decline of 15% in previous session after the company reported fiscal 2022 third quarter revenues declined 8% to $492.9 million and net loss of $78 million or 72 cents a share. 

The style company said the total number of active clients declined 5% to 3.9 million and net revenues per active clients increased 15% to $553.  

Separately, the company said it has laid off about 4% of its workforce, including 15% of its salaried positions and took a one-time charge of $15 million to $20 million in the fourth quarter.   

In Europe, market indexes declined following the U.S. inflation report. 

The DAX index dropped 2.3% to `13,868.70, the CAC-40 declined 2.3% to 6,210.61, and the FTSE 100 index fell 2.1% to 7,320.70 

In Asia, markets were cautious ahead of the release of the U.S. inflation report and the reimposing of restrictions in areas of Beijing and Shanghai also raised the prospects of longer lockdowns. 

The Nikkei index dropped 1.5% to 27,824.29, the Hang Seng Index declined 0.3% to 21,806.18, and the Sensex index dropped 1.8% to 54,303.44.