Stock Market News for Jun 15, 2022

Wall Street closed mixed on Tuesday as market participants waited for the Fed’s June FOMC decision. After, Friday’s CPI data, another key measure of inflation came in at almost a record-high level. The Dow and the S&P 500 ended in negative territory while the Nasdaq Composite finished in the green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slid 0.5% or 151.91 points to close at 30,364.83. .Notably, 19 components of the 30-stock index ended in negative territory while 11 in green. The blue-chip index has registered a five-day losing streak.

The tech-heavy Nasdaq Composite finished at 10,828.35, rising 0.2% due to strong performance of large-cap technology stocks. The tech-laden index is in bear market since Mar 7. The major gainer of the index was Pinduoduo Inc. PDD, shares of which jumped 12%. Pinduoduo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 dropped 0.4% to end at 3,735.48. The broad-market index officially entered a bear market territory on Monday. The market’s benchmark has registered a five-day losing run. Nine out of 11 broad sectors of the benchmark index closed in negative zone while two in positive zone. The Consumer Staples Select Sector SPADR (XLP) and the Utilities Select Sector SPDR (XLU) slumped 1.2% and 2.5%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 3.9% to 32.69. A total of 12.49 billion shares were traded Tuesday, higher than the last 20-session average of 12.01 billion. Decliners outnumbered advancers on the NYSE by a 1.96-to-1 ratio. On Nasdaq, a 1.36-to-1 ratio favored declining issues.  

Fed’s June FOMC in Focus

The Fed is on track for its June FOMC scheduled on 14 and 15. The Fed Chairman Jerome Powell announced in May FOMC statement that the central bank will raise the benchmark interest rate by 50 basis points in both June and July.

However, On Jun 13, the Wall Street Journal reported that the Fed officials are seriously considering to hike the lending rate by 75 basis points in June and July in order to combat mounting inflation. The Fed raised the Fed Fund rate by 25 basis points in March and 50 basis points in May.

The central bank has terminated the $120 billion per month quantitative easing program in March and started systematically reducing the size of its $9 trillion balance sheet since Jun. Yet, inflation data are showing no signs of abatement.

On Jun 14, the yield on the benchmark 10-Year U.S. Treasury Note rose 11.1 basis points to end at 3.483%. The yield on the short-term 2-Year U.S. Treasury Note closed at around 3.437%, climbing 16 basis points, marking its highest since 2007. The yield on the long-term 30-Year U.S. treasury Bond was up 6 basis points to 3.428%.

Economic Data

The Department of Labor reported that Producer price index (PPI) rose 0.8% in May compared with the consensus estimate of 0.9%. April’s reading was revised downward to 0.4% from 0.5% reported earlier. Year over year, the PPI jumped 10.8%.

The core PPI (excluding volatile food, energy and trade items) rose 0.7% in May compared with the consensus estimate of 0.6%. April’s reading was revised upward to 1.1% from 1% reported earlier. Year over year, the PPI surged 6.8%.

The National Federation of Independent Business (NFIB) reported that the Small Business Optimism Index decreased marginally to 93.1% in May from 93.2% in April. May’s reading was the lowest since April 2020. Almost 40% business owner said that the devastation of the global supply-chain system had a significant negative impact on their businesses.

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